Property Investing Made Pure
We've all seen the numbers time and time again.
It‘s very evident in the above data alone, that the bulk of these median income investors are buying investment properties that are taking too long to appreciate in value whilst not providing neutral/ positive cash flow to enable them to reinvest in the market. Thus, stopping at one or two properties.
A quick example of how the wrong investment can affect your cash flow below.
Taking into account the most recent three year growth projections for both Sydney (1-3% annual) Brisbane (3-5% annual). This is what an investor could expect from both examples.
That is a difference of $78,000 in three years!
I have intentionally not touched on negative gearing in the examples above, as I always like to consider negative gearing as a sweetener or a bonus rather than a ‘sure thing’.
The fact of the matter is that negative gearing only applies to your relevant taxable income. Investors circumstances change more regularly than one may think. Investors change/ lose jobs, family dynamics change, people retire, people invest in different types of trusts which incur different tax deductions etc. all of these factors have an impact on your depreciation options.
I know that we continually read that you should always invest for capital growth rather than neutral/ positive cash flow. But in my humble opinion, this is merely 'lazy investing'. Don't get me wrong, there are plenty of investors out there including myself, that have made significant amounts of capital growth investing in high growth areas that only offer yields of 4-5% (negative cash flow). But these types of properties have a much more appropriate place in one‘s portfolio once they have built a solid foundation of growth and cash flow. The main factor in this equation is ensuring investors don‘t ‘invest themselves out of the market’ through negative cash flow properties.
A good buyer‘s agent should always consider you current portfolio position/ income/ dependents and financial or investment goals.
This should determine what the next investment should be, whether that is a high growth/ cash flow positive or blend of both style properties. The type of investment property you choose should ALWAYS serve a purpose to achieving your investment goals.
To avoid becoming one of the investors that stop at ‘one or two’. Ensure you surround yourself with a good property focused accountant, broker, and buyer’s agent to ensure you are setting yourself up for success.
Contact us to help start your investment portfolio.
enquiry@purepropertyinvestment.com
1300 98 54 28
Disclaimer - Contents of this site are of general nature only and should not be relied upon solely when making an investment decision. Pure Property Investment nor any of its directors, associates, staff, or associated companies bear any liability from any actions derived from the contents of this website. One should always seek third party investment information from relevant parties such as legal, finance, and accountancy enquiries.