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Investment Strategy and Goals

Investment Strategy and Goals:

Sydney’s housing market is booming, but navigating rising costs and securing your ideal property can feel overwhelming. Here’s where house and land packages step in, offering a streamlined and potentially cost-effective solution for aspiring homeowners.

investment

Residential property investment has long been a reliable strategy for building wealth. Offering a lower-risk alternative to the stock market, it provides more predictable long-term returns. Haverton Homes specializes in helping you secure profitable property investments and achieve your financial goals.

Investing in property offers several advantages over the stock market. It’s a tangible asset you control, providing more stable returns and less risk. Leverage can amplify your gains, while tax benefits like depreciation can boost your investment. While the stock market offers higher potential returns, property investment is a reliable way to build wealth steadily and predictably.”

Capital gains tax: When you sell your property for a profit, you may be subject to capital gains tax. However, there are often exemptions and discounts available, especially for your principal residence.

Rental income tax: Rental income is generally taxable. You can deduct expenses related to the property, such as repairs, maintenance, and interest on your mortgage.

Depreciation: You can claim depreciation deductions on the property’s value over time, reducing your taxable income.

Negative gearing: If your rental income is less than your expenses, you may be able to claim a tax deduction for the difference.

For more information watch our paying too much tax video

You can use your Self-Managed Superannuation Fund (SMSF) to purchase an investment property by following these general steps:

  • Establish an SMSF: If you don’t already have one, you’ll need to establish a SMSF and appoint trustees.
  • Obtain a loan: Your SMSF can obtain a loan from a lender to finance the property purchase. The lender will assess your SMSF’s financial situation and the property’s potential to generate income.
  • Purchase the property: Once the loan is approved, your SMSF can purchase the property.
  • Manage the property: Your SMSF will be responsible for managing the property, including collecting rent, paying expenses, and ensuring the property is maintained.

For more information on SMSF’s, reach out to our investment team at 1300 293 318 or book a 15-minute discovery call (link). Our team is ready to assist you with your investment planning, working together to find the best property investment strategy tailored to your goals and financial needs.

 Owning an investment property can help you pay off your mortgage quicker in several ways:

  • Rental income: The rental income generated by the property can be used to make additional payments on your mortgage, reducing the principal balance.
  • Tax deductions: Depreciation deductions and other expenses associated with the property can reduce your taxable income, potentially freeing up more money to put towards your mortgage.
  • Property appreciation: If the property appreciates in value over time, you may be able to refinance and use the equity to make a lump sum payment on your mortgage.

To find out more watch our– How can I pay off my residential mortgage quicker here + Link

 

Reason Number 2: Pay Off Your Residential Mortgage Quicker

Affordability and finances

Sydney’s housing market is booming, but navigating rising costs and securing your ideal property can feel overwhelming. Here’s where house and land packages step in, offering a streamlined and potentially cost-effective solution for aspiring homeowners.

The amount of down payment you’ll need for an investment property in NSW depends on several factors, including:

  • Loan-to-Value Ratio (LVR): Lenders generally require a minimum deposit of 20% of the property’s value to avoid paying Lenders Mortgage Insurance (LMI). However, some lenders may offer loans with lower deposits, but you’ll likely pay LMI.   
  • Property Price: The higher the property price, the larger your down payment will need to be.
  • Your Financial Situation: Your income, credit score, and other financial factors will influence the amount you can borrow.   

To get a more accurate estimate, it’s recommended to consult with a financial advisor or mortgage broker. They can assess your financial situation and provide tailored advice on how much you can afford to borrow for an investment property in NSW.

In addition to your mortgage, there are several ongoing costs to consider when owning an investment property:

  • Property management fees: If you hire a property manager, you’ll need to pay them a fee for their services.
  • Maintenance and repairs: You’ll need to budget for regular maintenance and repairs, such as landscaping, painting, and plumbing.
  • Insurance: Property insurance is essential to protect your investment in case of damage or loss.
  • Rates and taxes: You’ll need to pay council rates and property taxes.
  • Utilities: If the property is rented out, you may need to pay for utilities such as electricity, gas, and water.
  • Vacancy costs: There may be periods when the property is vacant, during which you’ll still need to cover expenses like mortgage payments and property management fees.

As part of Haverton Homes initial discovery call with all our clients we will sit down with you to help determine what your options are. We’ll assess your income, assets Ands liabilities to understand your starting point, what you want to achieve and work with you to create a customised plan. 

As part of Haverton Homes initial discovery call withal our clients we will sit down with you to help determine what your options are. We’ll assess your income, assets Ands liabilities to understand your starting point, what you want to achieve and work with you to create a customised plan. We will help you identify the right properties in the right location matched to your unique circumstances. 

Finding the Right Property:

Sydney’s housing market is booming, but navigating rising costs and securing your ideal property can feel overwhelming. Here’s where house and land packages step in, offering a streamlined and potentially cost-effective solution for aspiring homeowners.

finding the right property

The best investment property type depends on your goals and circumstances. Single dwellings offer lower costs and easier management but may have lower rental income. Dual living and duplex properties can generate higher rental income but require more upfront investment and management.   

Here’s a breakdown of the key differences:

  • Single Dwelling: Typically offers lower initial costs, easier management, and potential for capital growth.
  • Dual Living: Can generate higher rental income, provide tax benefits, and offer potential for greater cash flow.   
  • Duplex: Similar to dual living, but often with separate titles for each unit, providing more flexibility.   

Consider your financial goals, risk tolerance, management capabilities, and local market conditions. Consult with a financial advisor or property investment specialist for personalized guidance.

Here’s a comparison of the main factors to consider:

Single Living

  • Cost: Generally, less expensive due to smaller block size and a single dwelling.
  • Deposit: Requires a smaller deposit.
  • Income: Requires less annualized income at current interest rates.
  • Market Value: Typically around 95% of market value.
  • Sales Activity: Has recent sales in most areas, making it easier to assess value trends.
  • Equity Release: May be more favourable in a rising market due to consistent sales.
  • Financial Flexibility: Uses less of your funds and capacity, potentially allowing for future investments.

Dual Living

  • Cost: More expensive due to larger block size and the second attached dwelling (e.g., 4/2/2 plus 2/2/1).
  • Borrowing Capacity: Requires more outright borrowing capacity to service the larger debt.
  • Buyer Demand: Sought after by approximately 30% of real estate purchasers.
  • Sales Frequency: Rarely sold as they are often purchased by investors for dual rental income.
  • Bank Valuations: Bank valuations may be underestimated in a rising market, potentially limiting equity release.
  • Rental Income: Provides two rental incomes, improving serviceability and tax savings through depreciation.   
  • Market Demand: Typically sells quickly with low days on market due to investor interest.

Ultimately, the best choice for you depends on your individual financial goals, lifestyle preferences, and market conditions.

While many investment firms promote the latest development hotspots, it’s essential to consider the long-term factors that drive sustained growth. Instead of focusing solely on short-term trends, look for areas with strong economic foundations, population growth, established infrastructure, and potential for high rental yields. 

Additionally, consider the area’s livability factors, such as sports facilities, arts and culture, parks and recreational areas, transportation options, and access to national retailers. These amenities can significantly enhance property value and attract quality tenants.”

At Haverton Home we employ a rigorous 24-point criteria to evaluate investment areas. This comprehensive analysis considers factors like population growth, vacancy rates, infrastructure development, and livability amenities. By focusing on ALL these key indicators, we identify locations that are poised to offer stable returns and long-term growth

Additional Considerations

Sydney’s housing market is booming, but navigating rising costs and securing your ideal property can feel overwhelming. Here’s where house and land packages step in, offering a streamlined and potentially cost-effective solution for aspiring homeowners.

Investing in a property can be a lucrative venture, but it also carries certain risks. Here are some key factors to consider:

  • Market fluctuations: Property values can rise and fall, impacting your investment’s profitability.
  • Interest rate changes: Rising interest rates can increase your mortgage repayments and reduce your cash flow.
  • Vacancy risk: If your property remains vacant, you’ll still need to cover expenses like mortgage payments, property taxes, and insurance.
  • Tenant issues: Dealing with problematic tenants can be stressful and costly.
  • Maintenance costs: Unexpected repairs and maintenance expenses can eat into your profits.
  • Overcapitalization: Spending more on renovations or upgrades than the increased property value justifies can reduce your return on investment.
  • Lack of liquidity: Selling a property can take time and involve significant costs, making it difficult to access your investment funds quickly.
  • Regulatory changes: Changes in property taxes, zoning laws, or rental regulations can impact your investment’s profitability.
  • Natural disasters: Events like earthquakes, floods, or fires can cause property damage and financial loss.

While these risks are inherent in property investing, a well-researched and thoughtfully crafted investment strategy can significantly reduce your exposure. Working with an experienced investment advisor who employs a data-driven approach can help you make informed decisions and navigate the complexities of the property market. By combining sound financial planning with expert guidance, you can increase your chances of achieving long-term success in your property investment endeavors.

Disclaimer: It’s important to consult with a financial advisor and a tax professional to understand the specific rules and regulations governing the use of SMSFs for property investment. They can help you assess the suitability of this strategy for your circumstances and all applicable laws. 

Reason Number 1

Need to ask a question about Property Investment?

Haverton Homes offers a unique investment journey so you can tailor your investment and receive the best rental returns. It’s all about making your property investment option working hard for you.

Please contact us today to speak with one of our investment Consultants directly, either by email marketing@mail.havertonhomes.com.au or call us at 1300 293 318

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Suite 702
1 Pacific Highway
North Sydney
NSW 2060

1300 293 318

info@havertonhomes.com.au

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