5 Must Know's For Property Investors

What is the difference between an investment loan and a home loan?

Unlike a home loan, costs associated with an investment loan are tax deductible (eg interest, repairs, rates, depreciation, etc). However, be aware that any rental income will generally increase your taxable income. Another key difference is that any appreciation in the value of an investment property (capital gains) is taxed.

What is negative gearing?

In Australia, if you earn less from an investment property than it’s costing you, you’re said to be negatively geared. The motivation to be negatively geared is that it reduces your taxable income and you accept a short-term loss in the hope of a capital gain later.

How much does a property manager cost?

The cost of having a professional manage your rental property is between seven and ten per cent of your total rental income each week. So, for a property with an average rental return of $550 per week, you would need to pay the agent between $38.50 and $55 per week, which amounts to between $2,002 and $2,860 per year. If you compare this to the time commitment and potential costs you could face if you were to represent yourself at the tribunal, this weekly management fee is marginal. 


What are the additional costs when purchasing an investment property?

Along with the cost of your deposit, you need to account for the cost of building inspections, stamp duty, conveyancing fees and any legal costs.


What are the ongoing costs of an investment property?

As the owner of an investment property, you will need to pay council rates, water rates, insurance, body corporate fees, land tax, property management fees, repairs and maintenance costs. The income you receive from the tenants in rent will help in covering some, or all of the ongoing costs of the investment property.


HOW WE SUPPORT CLIENTS

At Profy Finance and Wealth, we have supported clients who are investing in property, through:

  • Helping them get clear on their objectives for the property
  • Arranging valaution reports to guide you on potential offer prices
  • Arranging home loans to access home equity for investment
  • Calculating and recommending finance options
  • Arranging fully approved finance
  • Providing Tools to assess the cashflow and return on investment for the investment property
  • Arranging value add services such as building and contents insurance, depreciation reports, and legal conveyancing at preferred prices.
  • Updating their super and life insurance via our licensed financial planning services
  • Helping them plan for any taxation outcomes

At Profy Finance and Wealth, we cover financial advice and mortgage broking to get more holistic results for our clients. Learn more about how we could help...