Simple Choices lead to Long Term Property Investment Success
by Adrian Stagg
There’s a well worn phrase “knowledge is power” and it applies to property
investment as well as many other things in life. Of course knowledge without
action is useless, so be sure to gain the knowledge needed first, then be sure to
use it. We have probably all seen examples of “paralysis through analysis” but
there’s no substitute for doing some market research of your own, look for
market trends, read widely and get to understand property cycles and what
drives them – ie look at the big picture too. Some specialised knowledge is best
sourced from professionals who are experienced in their respective fields. This will
of course cost more to obtain. Don’t be afraid to pay that price though as it will
likely save you far, far more in the long run.
2. Be Tax and Structure Smart:
If you want to keep the bulk of the fruits of your successful property investment it
is essential that you plan ahead and structure your investments in a tax friendly
way. These considerations will involve use of a family trust or company structure
or possibly a self managed super fund. Get to understand the meaning of positive
and negative gearing, allowable tax deductions and how they may impact on your
personal income after tax and how capital gains will be taxed or otherwise if you
sell the property. That could be the difference between you paying tax on 100%
of the gain or 50% or even less.
3. Choosing the right property:
Decide your goals and plans before you choose the property investment and then choose a
property that will accord with those plans and goals. Generally speaking it’s
preferable to go for capital growth as opposed to income (why? Go here for the
answer). Look for a property that has the potential to add value or has a higher
and better use such as subdivision.
It’s rarely ever black and white when it comes to working out a property’s potential, however ascertaining it’s true zoning is a good place to start. There may be other constraints such as what’s known as a DCP (Demolition Control Precinct). Many older character areas can be subject to this. The site’s dimensions are also paramount as most councils have minimum frontages, land size and boundary clearances etc. Location is very important as we all know but so is the location of
essential services such as sewer, stormwater, power etc and how these may
impact on the viability of any future development potential.
Adrian Stagg is a property development consultant for SCM Projects along with other private business interests and has been actively involved in the property industry since the 1970’s. His first foray at an unusually young age was as an investor. Since then he has worn the hats of Real Estate Agent, Renovator, Builder, and Property Developer and of course, home owner. Through all these years, he has witnessed several cycles in property markets and now guides clients looking for ‘an edge’ in their journey through property investment strategies and runs property investment seminars. Check out his blog where he shares his insights on smart property investment and how to get through the property maze