Buying An Investment Property

Buying a house or flat as an investment is a secure way to build your assets. Bricks and mortar can be more appealing than the boom and bust cycles of the stock market. Check our Top 5 investment property tips first, and make the best decision for your financial future.

1. Buy from the head, not the heart

You are not looking for a property that suits your lifestyle - you are looking for long-term capital growth. So choose a place you wouldn't live in - but one that someone else would. To find the next up-and-coming property hotspot, look at areas where rental demand is greater than supply, where prices are lower than neighbouring areas but likely to rise, and where there is good access to transport, shops, schools and other amenities.

2. Factor in the extra costs

To make the most of capital growth, you need to plan on holding the investment for at least seven to 10 years. Make sure you can not only afford the mortgage payments, but also stamp duty, strata levies, land tax, maintenance costs, home improvements, property management costs and insurance. The good news is, a lot of these costs are tax deductible. Which brings us to...

3. Make the most of the tax breaks

You can negatively gear your investment property in Australia - which means you can claim cost of renting your property against the rental income. These costs include your mortgage interest, property management fees, rates, maintenance and repairs and landlord insurance. This can result in a substantial tax return on your salary - but remember, the property is still costing you more than you earn from it in rental income, so ultimately you're still footing the bill for the difference!

4. Choose a good property manager

To protect your investment, make sure your property management firm looks after it on a day-to-day basis. As well as finding a good tenant and collecting the rent, they should arrange inspections and regular maintenance.

5. And don't forget insurance

As well as building and contents insurance, you should also take out landlord's insurance. This can also protect you against a loss of rental income, so it's well worth it for peace of mind.