The Business Tutor
02-01-12, 07:31 PM
Read through this earlier - Might come in useful for some of you...
Building your property portfolio
From homeowner to set-for-life in just a few easy steps:
Worrying about how you will survive in later years on the pension or even if there will still be one by then? Wishing for a brighter and more prosperous future for yourselves and your family?
At some stage in our lives we make a conscious decision to follow one of two paths in life:
Do nothing and rely on the old age pension or take positive steps to become financially independent by buying an investment property.
Don't just dream about it - make it happen!
Financial security and wealth for your future can be a reality for those who know how to plan ahead for your retirement years. If you have considered your options you will know that the three most common forms of investment are shares, bank deposits and property. Recent drastic fluctuations in the stock market have created wariness for investors and with current low interest rates, bank deposits are yielding very little returns, but property still stands strong as the single most secure pathway to a prosperous financial future.
Property statistics collected over the past one hundred years show that over the long term a well-selected property can double in value nearly every ten years.
Best time to buy property
Although financial commentators have often tried to predict the “best” times to invest in real estate, the truth is the best time to invest in real estate is simple when you can afford to.
If you sit back and wait for the perfect moment you risk missing the boat altogether. Don’t you wish now that you had bought more property when prices were low even ten years ago? The time that you enter into the property market is not as important as the time you are prepared to spend in the market letting that time work for you. Inflation is the property investor’s friend. Working longer hours and up to seven days a week is no longer the best way to get ahead. Purchasers of investment properties have the advantage of the tax man, the tenant, time and compounding growth working for them, so even as you work, sleep or play, the value of your investment property still continues to increase.
Unless you plan to be still working well into your retirement, make sure you take steps now to ensure your enjoyment of life in those later years.
Using leverage to kick start your investment portfolio:
When talking about property investing, the term “leverage” is often used to explain the process of lifting the stakes in the direction of a desired outcome. Taking advantage of this leverage gives you a vital step-up towards your investment goals. In the case of property investment, the desired outcome is to increase capital gain of the purchased assets with minimum outlay.
The best way to ensure this outcome is to finance the investment as much as possible to ensure maximum future profits. The larger borrowing power available to property purchasers than to other investors creates even more money to invest which in turn leads to greater potential growth and much greater investment returns in the long term. Leverage also creates ideal circumstances to claim tax deductions on costs associated with your investment such as interest on loans, initial costs, depreciation and some other costs.
Tax-offsets and negative gearing:
Owning an investment property is like running a business in that many of the associated expenses are tax deductible. According to an EPAC Report, geared residential property is the most tax advantaged investment available in Australia. The advantages of investing in property come in more than just the returns on your investment as the property increases in value, there are also numerous tax advantages available to those who buy and own investment properties.
Tax deductible expenses include the cost of purchasing the property, interest payments and property maintenance costs, accounting fees, council rates and charges, body corporate fees, in-house PABX/video installations, depreciation on the building, fixtures and fittings, pest control, landlord insurance, survey fees, secretarial fees and even stationery. Also, any tools you purchased to help you make your investment decision including books, manuals, courses computer software and magazines can all be deducted from the rent received on the property, thus further reducing the amount of tax you have to pay on the rental income.
Negative gearing
If it costs you more to buy and maintain the property than the amount you have received in rent, this is called negative gearing and these costs can be effectively used to reduce your marginal tax rate. The more properties you own, the less tax you will have to pay.
Step one – getting started:
If you are a property owner or fist time investor all you’ll need to start a property portfolio is a $1,000 fully refundable deposit held in a solicitors trust account. Find a good area to buy your first investment property, one that is in a growth area is ideal. Homes built near schools, public transport and shopping centres generally offer the best rental occupancy rates. Take advantage of what David Nilsson calls the OPM Principle; in other words, use Other People’s Money to borrow as much of the purchase price as possible. This will reduce your outlays and increase opportunities for further investments. If you already own a home, you can also use the equity in that home as a stepping stone to start building up your investment property portfolio.
Step two:
Once you have built up some equity in the first investment property, you can then use that equity to invest in a second property. The banks will then use the equity in your first home as security over the second property and so on. Gradually buy more investment property as increasing equity and cash allows. Using these simple steps you can re-invest in as many properties as you like while raking in the benefits of negative gearing along with the accumulating capital gains. Watch your equity increase with rising property values and decreasing loans while your cash flow increases with rising rents and wages.
Step three:
Sit back and let time work for you even though evidence supports the fact that most properties increase in value by up to 100% approximately every ten years, investors should be aware that the property market is subject to the normal variations that are evident in all markets and look on their property investments as a long-term investment option in order to reap maximum rewards.
Generate eight sources of income through property investment:
Put your home to work – use the equity in your home to buy more now than you could in ten years time.
Receive income through tenants paying you rent.
Benefit from additional tax incentives available to investors by the government.
The money you borrowed from the bank is now making more money for you.
Your investment property is growing each year with compounding growth.
Benefit from reductions in personal income tax rates available to investors.
Benefit from your partner’s lower personal income tax rates.
Compounding growth on your own home creates even greater opportunities for investment.
Source: http://www.refundrealestategroup.com.au/building-your-property-portfolio
Building your property portfolio
From homeowner to set-for-life in just a few easy steps:
Worrying about how you will survive in later years on the pension or even if there will still be one by then? Wishing for a brighter and more prosperous future for yourselves and your family?
At some stage in our lives we make a conscious decision to follow one of two paths in life:
Do nothing and rely on the old age pension or take positive steps to become financially independent by buying an investment property.
Don't just dream about it - make it happen!
Financial security and wealth for your future can be a reality for those who know how to plan ahead for your retirement years. If you have considered your options you will know that the three most common forms of investment are shares, bank deposits and property. Recent drastic fluctuations in the stock market have created wariness for investors and with current low interest rates, bank deposits are yielding very little returns, but property still stands strong as the single most secure pathway to a prosperous financial future.
Property statistics collected over the past one hundred years show that over the long term a well-selected property can double in value nearly every ten years.
Best time to buy property
Although financial commentators have often tried to predict the “best” times to invest in real estate, the truth is the best time to invest in real estate is simple when you can afford to.
If you sit back and wait for the perfect moment you risk missing the boat altogether. Don’t you wish now that you had bought more property when prices were low even ten years ago? The time that you enter into the property market is not as important as the time you are prepared to spend in the market letting that time work for you. Inflation is the property investor’s friend. Working longer hours and up to seven days a week is no longer the best way to get ahead. Purchasers of investment properties have the advantage of the tax man, the tenant, time and compounding growth working for them, so even as you work, sleep or play, the value of your investment property still continues to increase.
Unless you plan to be still working well into your retirement, make sure you take steps now to ensure your enjoyment of life in those later years.
Using leverage to kick start your investment portfolio:
When talking about property investing, the term “leverage” is often used to explain the process of lifting the stakes in the direction of a desired outcome. Taking advantage of this leverage gives you a vital step-up towards your investment goals. In the case of property investment, the desired outcome is to increase capital gain of the purchased assets with minimum outlay.
The best way to ensure this outcome is to finance the investment as much as possible to ensure maximum future profits. The larger borrowing power available to property purchasers than to other investors creates even more money to invest which in turn leads to greater potential growth and much greater investment returns in the long term. Leverage also creates ideal circumstances to claim tax deductions on costs associated with your investment such as interest on loans, initial costs, depreciation and some other costs.
Tax-offsets and negative gearing:
Owning an investment property is like running a business in that many of the associated expenses are tax deductible. According to an EPAC Report, geared residential property is the most tax advantaged investment available in Australia. The advantages of investing in property come in more than just the returns on your investment as the property increases in value, there are also numerous tax advantages available to those who buy and own investment properties.
Tax deductible expenses include the cost of purchasing the property, interest payments and property maintenance costs, accounting fees, council rates and charges, body corporate fees, in-house PABX/video installations, depreciation on the building, fixtures and fittings, pest control, landlord insurance, survey fees, secretarial fees and even stationery. Also, any tools you purchased to help you make your investment decision including books, manuals, courses computer software and magazines can all be deducted from the rent received on the property, thus further reducing the amount of tax you have to pay on the rental income.
Negative gearing
If it costs you more to buy and maintain the property than the amount you have received in rent, this is called negative gearing and these costs can be effectively used to reduce your marginal tax rate. The more properties you own, the less tax you will have to pay.
Step one – getting started:
If you are a property owner or fist time investor all you’ll need to start a property portfolio is a $1,000 fully refundable deposit held in a solicitors trust account. Find a good area to buy your first investment property, one that is in a growth area is ideal. Homes built near schools, public transport and shopping centres generally offer the best rental occupancy rates. Take advantage of what David Nilsson calls the OPM Principle; in other words, use Other People’s Money to borrow as much of the purchase price as possible. This will reduce your outlays and increase opportunities for further investments. If you already own a home, you can also use the equity in that home as a stepping stone to start building up your investment property portfolio.
Step two:
Once you have built up some equity in the first investment property, you can then use that equity to invest in a second property. The banks will then use the equity in your first home as security over the second property and so on. Gradually buy more investment property as increasing equity and cash allows. Using these simple steps you can re-invest in as many properties as you like while raking in the benefits of negative gearing along with the accumulating capital gains. Watch your equity increase with rising property values and decreasing loans while your cash flow increases with rising rents and wages.
Step three:
Sit back and let time work for you even though evidence supports the fact that most properties increase in value by up to 100% approximately every ten years, investors should be aware that the property market is subject to the normal variations that are evident in all markets and look on their property investments as a long-term investment option in order to reap maximum rewards.
Generate eight sources of income through property investment:
Put your home to work – use the equity in your home to buy more now than you could in ten years time.
Receive income through tenants paying you rent.
Benefit from additional tax incentives available to investors by the government.
The money you borrowed from the bank is now making more money for you.
Your investment property is growing each year with compounding growth.
Benefit from reductions in personal income tax rates available to investors.
Benefit from your partner’s lower personal income tax rates.
Compounding growth on your own home creates even greater opportunities for investment.
Source: http://www.refundrealestategroup.com.au/building-your-property-portfolio