Like any industry, property has its own terms and concepts, and it can be a little overwhelming at first for those interested in learning more about investment property. Especially if you’re doing a lot of research and homework online, you will often come across phrases that you may not understand or are not sure how it might relate to you. We have included a few of the more common concepts in property investment to help you get the best start possible to building your investment future.
Negative gearing generally applies to a property investment if your expenses and costs during the year are more than the income you are receiving from it. You can claim your losses against your assessable income for owning, managing and maintaining an investment property. The Australian Tax Office will let you offset a number of expenses and costs such as interest from your loan and bank charges, repairs and ongoing maintenance.
Interest Only Loans
You often hear the terms “interest only loans” in relation to people with investment property because it is a popular way to reduce the amount of money regularly being paid in mortgage repayments while letting the value of the property increase over time. Essentially you can only choose to pay the interest on your mortgage, rather than the interest and the capital. You can also opt for a loan that is partly interest only if you wish to reduce your costs over a certain period. Interest only loans are generally available to property investors, although there are obviously a number of restrictions and rules that apply and everyone’s circumstances can be different.
Traditionally real estate tends to go up in value over time, meaning that a property purchased in 1990 will cost more to purchase today. This is capital growth, and most people interested in investment property will be looking for their properties to go up in value over a 10 to 15 year period. Capital growth should also be considered along with the concept of the return on investment (also known as the net or gross yield) on the property.
Property Investment Seminars
One of the quickest and easiest ways for first time property investors to get up to speed with the industry is to attend one of the many investment seminars that area held across Australia. A good investment seminar will give you with up to date information on finding and purchasing different types of property – for example, Ironfish runs seminars that provide information on off the plan property investment – as well as latest trends and data on the property market in general.
If you are a first time property investor and are interested in finding out more about the current property market and suitable property investments, contact a professional investment company such as Ironfish. They will be able to assist you with creating a practical long-term strategic plan for building a successful property portfolio. Their dedicated research team and “on the ground” experts can give you an unmatched advantage in today’s property market.