Questions we think you may want to ask before investing in property
We believe everyone should strive to ensure that they have a comfortable and solid financial future, and time and time again property has proven to be a good vehicle in which to invest.
In order to determine whether or not you can do so safely we feel you should have considered and answered the following questions:
- How much can you afford to take from wages each week and invest?
- To us it doesn’t matter which vehicle of investment you invest in, what is most important to us, is that you invest only what you can afford.
- What is the strategy that you are going to employ?
- Are you a renovator?
- Perhaps you’re a developer or perhaps you just prefer the sit and forget method.
- How are you going to structure your finances?
- Are you going to let the banks do that for you? Or would you prefer the option of minimising your risk and choosing a strategy that may not appeal to your local bank, but will reduce your risks?
- Asset protection. How are you going to protect your assets?
- How can you invest in another property without risking your family home at the same time?
- Is the property going to be cash flow positive, neutral or negative?
- How much will the banks lend to you?
- How long do you have to make a financial return?
Determining your investment strategy is just as important as the asset itself. We feel you should have clearly answered the above questions before you even walk out your front door.
Making sure that you have looked at your strategy from a financial perspective can save you wasting hours of your time. Understanding your financial structures and strategy first will also reduce the possibility of financial stress and having to sell a property prematurely and taking a loss.
We recommend you call us to carefully assess your current financial situation. We will consider your goals and objectives, determine with you what is affordable and manageable and outline a financial strategy that is safe and affordable for you so you know exactly where you stand.
Why is Property One of the Most Popular Investments Choices by Australians?
Residential property offers the security of ‘bricks and mortar’ compared with the fluctuating values of shares and commodities. This is one of the reasons most banks will lend up to 95% of the residential property value compared with all other investment options.
Residential property is a stable and passive asset class requiring very little management, unlike other investment strategies.
Property is a basic human necessity. Everyone needs a home to live in and as long as our population continues to grow, the demand for property will continue.
Considering the upward and downward trends of the property market in Australia, the underlying trend shows remarkably steady growth over the medium to long term.
Historically, the median house price in Australia has doubled every seven to ten years. As the Australian population continues to grow, the demand for housing will invariably continue to increase which, in turn, forms a trend line of continued capital growth in Australia.
Property, for most Australians, is familiar territory. It is easier to develop a successful strategy for building a portfolio of investment properties than it is to negotiate the volatility and complex nature of the share market.
If you would like more information please contact Vanquish Finance Group.
The basic fundamentals of wealth creation
Develop a Strategy to Build Assets
The wealthy know that holding quality assets is the key to wealth. They also know that a key component is the development and constant refinement of their investment strategy to determine what asset class they should invest in and when.
If you are borrowing money to acquire the asset then you need to develop a financial strategy and loan structure to ensure you are not jeopardising your home to acquire the asset and miss out on the potential taxation benefits that the asset may provide.
Income Producing Assets
At some point in your life you are going to stop working, either by choice or age. Most people retire to the Government Pension which is not usually adequate to live out your retirement years comfortably.
If you want to retire with enough money in your pocket to enjoy those latter years of your life, then you will need to develop a strategy while you are young enough and are earning income to do so.
Your investment strategy should take into consideration capital growth of the asset and one that produces a regular monthly income which will continue to grow with inflation. Your strategy should be designed to permanently replace your income.
Asset Protection
All investment strategies carry risk, generally, the higher the return, the higher the risk, so all investment strategies need risk management. Your strategy should cater for various levels of risk and your plan should be adequate enough to protect your investments.
If you would like more information about successfully budgeting, please contact Vanquish Finance Group on 0409 089 456.
