5 ways to maximise an investment property portfolio
If you’re thinking about creating an investment portfolio to look at more ways to build your wealth, there are a number of things you need to know to maximise your returns via property.
Buy new not old
After years of experience, and making enough mistakes myself, the most important thing I have learned is to buy new, not old. There are quite a few reasons for making this decision – obviously one is the huge difference the tax benefits can make. However, there are many more properties that are new and often more attractive to tenants. The maintenance costs are close to non-existent as the builder is responsible for correcting any faults for six years. The growth in the value of a new property often exceeds older properties in the same area.
Do the right research
The majority of investors don’t do enough research, or worse still, get incorrect information from the huge amount of data available online. Good research can take weeks to put together and hone down from the right state to the right town, the right suburb and the right property. It is vital to know what is happening with infrastructure spending, demographics, employment, economic growth and supply and demand, to name just a few. Often when someone does a lot of research, they end up getting so confused they do nothing – paralysis by analysis is a common end result.
‘Timing’ the market and ‘time in’ the market
Two important parts of creating long-term wealth with property are timing the entry point in a market to maximise the capital growth, and time in the market – meaning keeping the property long-term. Timing the market means being brave and bucking the trend. Purchasing a property when the property clock is at six o’clock is one of the hardest things for a novice investor to do. Time in the market is vital for successful wealth creation. Most property averages five to 10 per cent per annum over any 10-year period, however, property doesn’t increase every year. The market usually has two or three years of strong growth, five or six years of fl at and even some years of negative growth.
Getting the tax side sorted
Don’t ever buy a property for the tax benefits. Always buy a property for its growth and income potential. The government can change tax legislation at any time. By treating the tax benefits as a bonus you will never have to worry about those changes.
Don’t kill the golden goose – keep vs. sell
Here is the important one. A property long-term will continue to grow in value and increase in rental return. This will give you an ongoing increasing income for the rest of your life – and can be handed down to your kids when the time comes. In comparison to any other investment, property in retirement has proven to be the best return and the least risk. Not only does the rent (your income) continue to increase each year, usually ahead of inflation, the capital value goes up over time as well. Almost all of the top 200 wealthiest people in Australia accredit a large part of their wealth to property.
Property in retirement has proven to be the best return and the least risk.
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