Real Estate Investment

real estate investment
  Real Estate Investment


One of the questions we are asked every week at Ample Property Solutions is “how do we safely build a property portfolio  ? ”

Let`s start with the word “safely” first.

Adverb- in a way that gives protection from danger or risk.
In a perfect world, the best way to be safe, is not do anything.
Without being flippant, the safest thing you can do with your money is to keep it in a shoe box under your bed, or place it in a bank.

The problem with the first choice is the money can be stolen or destroyed.
But it now has no way to increase in wealth.
It`s not “working” for you in the slightest.
And the problem with the second choice is, the money is secure, but the returns banks offer (compared to other modes of investment) are poor.

The mindset is to create ways for your money to work for you.
Rather than you, working for money.
Which would you prefer ?

Then the next question is,  how much for a deposit will we need ?
We are classifying cash and equity in property as potential sources for the deposit.
As a rough measure, we advise out clients to have approximately $80K+.
This is a safe buffer and assures (all things being equal of course) a relatively quick process with the lending institutions.

We advocate investing in brand new property over an established property for tax minimisation and other benefits.
The next suggestion is slightly counter intuitive, but we advocate buying an investment property rather than buying a family home.
The example we will use is based on Sydney prices since many of our clients come from this city.
So for example.

Scenario 1
We are renting one property for approximately $650 per week on average, with a value of about $900k, and we have an investment property worth about $450K which will work out about a $50 per week investment to hold the property.
This occurs because we are using all the tax advantages the Australian government allows us for new properties as well as receiving rent.
In short – Property Expenses vs Income & benefits.
So we are now living in an area we like, for $700 per week (Investment Property included) but we now have an investment property that is increasing in value by an average of 5% every year.
Now let’s look at the other side of this situation.

Scenario 2
We decide to buy a property in Sydney in an area that we really want to live in but in essence, we would have to financially stretch ourselves.
Which leaves us to be highly exposed should there be a dip in the market, as we follow the Property Cycle.
This “cycle”will be discussed in another Article !

So, our family home will cost us around $900K which will end up being an extra $300 in mortgage repayments per week.
We now have paid over $130K deposit to achieve finance, and now have $750K plus as debt.
With an average Interest of 5%
Then you have all these expenses like rates, insurance etc and these are all liabilities out of your pocket.
Without any Tax advantages !

Yes it goes up in value, but you do not have the leverage you would have had by utilising a new investment property.
So in the second scenario you would be out of pocket around $1,000 plus per week with no investment property.

Imagine having multiple properties that allow you to be able to afford your dream home in an area you desire.
It is a numbers based decision and not an emotional one.

If you already own your home and have been in it for a few years, and you want to leverage the equity, then Ample Property Solutions is the team to help guide you through your first or second investment!

What people have to try and avoid, is becoming mesmerised by their own back yard when it comes to investing.
Many investors are fixated on an investment property, that is near their own home, so they can “check on it”. This is when a huge amount of emotion is attached.

The moral of this story is that it is possible to rent in an area you would like to live in, whilst owning an investment property.
Whilst a standard route is having to buy a family home in a traditional way, in an area you can only afford to live in.
Rather than living in an area you would like to live in !

It is more than likely  that investors, especially in Sydney, are not talking about a new property.
Most of the time they are considering older homes, with all the attendant costs associated with this type of property.

And the costs of investing in Sydney, are astronomical !

Which is why we always direct our clients to investing nation wide.
There are peaks and troughs with investing, city by city, and where you invest and when you invest are highly critical bits of information.

If you are in the market for a new investment property, without the emotional attachment, then Ample Property Solutions has the right team to help you !
Contact us today !


Why not come to our first Sydney seminar in 2017 ?

The Power Of Property Investing- Seminar in Five Dock 7.30 pm
Click HERE