Investing in Finance bricks & mortar Safe as houses? Make informed decisions and watch your nest egg grow. Residential property has historically delivered strong returns over the long-term and whether you’re an astute investor or owner-occupier looking to dip a toe in the market to take advantage of low interest rates, a simple check list could result in significant savings. Plan for the future Have a clear understanding of what you intend to do with the property. Does it require renovations? Is it high maintenance? Is it a future investment or will you owner-occupy? The upside of residential property investment is that there are no daily price fluctuations, making it easier to stick to your investment plan. One of the ways that investors can make a difference when it comes to residential property investment is with their personal involvement and local knowledge. Locality risk Buying in the wrong location is a real risk for residential property. While other areas are steadily increasing, a wrong location can be stagnant and affect return over the long-term. Do your homework before committing. Who should be on the title? Think about who will be on the title and why.Consider your long-term goal and whether you later plan to rent the property. It might be 99 per cent income to the highest and most stable income earner and 1 per cent to the other. Will it be in a company name or a trust? Know the reason and make sure it’s not going to cost you in tax deductibility down the track. Stamp duty Consider the purchase price offered by referring to the stamp duty guide before signing a contract as there could be savings. The costs to buy and sell are quite high for residential property. Stamp duty and mortgage registration costs need to be taken into account. Make sure of savings to be had on stamp duty. Contract timeframe Consider the time frame for the contract, particularly if you are self-employed. It is best to request 14 working days for finance due to bank requirements these days with valuers so there could be timing issues. If you extend settlement to 60 days, remember stamp duty is still payable in 30 days. If purchasing an investment property with contents, request that the contract is split to include two figures - the purchase price and contents for tax purposes with a list of the contents attached. This could save hassles with the taxation office, but also assist with minimising stamp duty costs. Building and pest inspection Buying a home or investment property is likely to be one of the biggest decisions most of us will ever make. And yet some people are willing to let it all come crumbling down because of a tiny invader. The average repair cost for termite damage to a house is $7000 but we’ve all heard horror stories where homeowners have had to pay out tens of thousands of dollars to rectify a termite problem. Make sure it is the seller’s problem and not yours. Get the right product Talk to your financial adviser and work out if the loan should be considered with a 100 per cent offset account. If long-term for investment, try to keep the debt high so you can make use of the tax deductibility when you rent the property at a future date. Insurance Insure within three business days of signing purchase contract to cover property as you are responsible. If the property is not insured during this timeframe, you are responsible not the seller. Pindara Magazine 111
Pindara Private Hospital Magazine - Issue Three
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