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A Step-by-Step Guide To Acquiring Your First Property Investment

Have you ever wanted to purchase an investment property but you just had no idea how? Well, you’re in luck because we’re about to outline the five-step process of selecting, buying and managing a property.

An investment property is a solid financial move for your future. Whether it’s to boost your retirement plan, retire early or set your family up, an investment property can be a step in the right direction.

You’re not just investing in property; you’re investing in a financial plan. Investing in real estate is a long-term plan, so you need to take the time to talk to your partner or your finance broker about your plan. By setting clear goals and timelines, you’ll have a better chance of achieving them.

Your journey to financial freedom begins here.

Step 1: Finance and Pre-approvals

It is important to consider your short and long-term goals and review your finances.

Check your credit rating – Start budgeting to ensure you can balance your income and expenses to plan for greater upcoming expenses. You should also consider reducing your credit card limit and minimizing your debt.

Find out if you qualify for a bank loan – Discover your potential borrowing power by speaking to your bank, credit union, broker or financial adviser. Otherwise, contact an OAK Lending consultant for obligation-free advice on your pre-approval status on 1300 006 625 or at info@oaklending.com.au. Pre-approval comes from your mortgage broker or directly through your lender.

Step 2: Select and Reserve your Property

Explore and research the properties available, then compare and choose the one that suits you.

Step 3: Review the Contract

Your solicitor or conveyancer will review the contract for sale independently and make sure you understand what you’re signing up to. They will also negotiate with the seller’s legal representative on contract conditions, making the process of documentation and settling easier.

Step 4: Sign the Contract for Sale

If you want to go ahead with the purchase, you’ll need to return the signed contract and pay the balance of the deposit.

Step 5: The Contract Exchange

Once you’ve exchanged signed contracts with the seller, you’ve secured the property. You’ll need to pay the balance of the 10% deposit. You won’t need to pay the balance of the purchase price until the property is settled.

Maximising your Investment

After the settlement, it’s time to take ownership and move in or sign up your first tenant.

For off-plan purchases, settled properties come with a 90-day warranty maintenance period. For any defect issues identified within the first 90-days after the handover, these are submitted by the purchaser to the Builder on a warranty claim form.

For more information, you can email our managing director via mike@starcentralmag.com to start your investment journey.

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Top 5 Reasons Why Investing In Property Will Set You Up For Life

Retiring early can seem impossible for most people, but did you know you can retire long before your 50’s if you start investing now in property?

More and more Australians are finally understanding a new way of thinking – not just buying a home to live in, but actually buying properties to build wealth that’ll enable them to retire at an early age. The typical first homeowner now considers purchasing an investment home instead of a house to live in, rent it out and then either move in (when weekly expenses are less than rent), leverage to eventually buy their own home, or rent in their desired area.

That’s right, Australians are now investing in property to achieve their future financial goals. Their buying property in strategic locations and leveraging bank finance. More and more Australians are also becoming aware that rental income can pay down their mortgage which then leaves them with an asset(s) that delivers a passive income stream that can sustain them well into the future.

With every investment, there are inherent risks and rewards, particularly when it comes to borrowing funds or making off-plan purchases. That’s why it’s important to do your homework and consult independent legal and financial advice before making any property purchase or investment.

We’ve compiled the top 5 reasons why you should invest in an off-plan property, specifically in the Sydney market.

1. It’s actually easier than you think

We can make it really simple for you.

Let’s say you’ve done your suburb research, you know how much your budget is, and you understand the negative gearing benefits…so what’s stopping you??

Getting your finances sorted is the crucial step, so you know your borrowing capacity. Now you just need to find the right property. We can help you find the right property and in good faith assist you through the purchase process.

2. You use ‘other people’s’ money to pay off your off-plan investment

This is where the “Buy and Rent” model really pays off. Despite the initial deposit (i.e., you leverage current home equity or savings), you borrow funds from a financial institution. Interest rates are currently the lowest we’ve seen in over 50 years, meaning lower repayments, so now is definitely the right time to take advantage.

Tenants pay down your mortgage through weekly rent. For positively geared properties, rental income exceeds your borrowings. For negatively geared properties, your rental income will be slightly less than borrowings. All while you sit back and watch your investment grow. You can then use the equity in this property, from capital growth, to fund your next investment.

Which leads me to the next great reason to investing in property; The ATO (Australian Taxation Office) will allow you to claim a range of tax-deductible expenses through your investment property, including depreciation. The newer a property, the greater the depreciation levels. This serves to reduce your tax bill and improve your cash flow. Talk to your financial advisor or tax accountant about how you can reduce your tax bill through a property.

3. Property can offer greater predictability and certainty as an investment

Your investment choices are endless, and you should always discuss your circumstances and future financial goals with a financial advisor.

Bricks and mortar (houses) are generally long-term investments, and no matter what happens, you’ll still have a disposable asset at the end. Property is more predictable than other investment options, and the market cycles follow a fairly consistent trajectory – particularly in high demand Eastern states such as Sydney where property growth has been steadily growing over the past 50 plus years.

Given the current levels of demand for housing and rental accommodation, property with strong cash flow can weather you through uncertain times because it meets the basic need for housing. Rising population and drops in average household size mean that people will always need a place to live, even during difficult times.

4. Property can lead you to greater financial security and wealth

Will you have enough super to retire on?

How stable are my super investments?

Will your current employer contributions be enough to live out the retirement you’ve planned?

Will there be an aged pension when you retire?

What can I do to retire comfortably?

These are all questions to ask yourself in considering your future financial goals.

A balanced approach to your retirement and investment is a solid strategy. Property can lead to great wealth – we’re forever reading about property moguls and how simple it is to get started and make millions. Where property is concerned, capital growth can lead to great asset value, and rental income leads to a passive income stream once your investment is paid down.

5. You control the destiny of your portfolio

You control where you buy, how many properties you buy and when to sell. And to a certain degree, how much you can achieve for rental return.

Unlike other investment types, property affords you many options regarding growing the value, size, and income for your property. While market forces and economic conditions play a role in influencing property values and demand for properties, you are still the captain of your own ship – steering your portfolio in the direction of your future financial goals and life circumstances. And with our Investor Portal, you can monitor, reserve, purchase and make changes to your property portfolio – anywhere and anytime.

Once your finance is in order, you’ll need to do your due diligence (arrange bank valuation and undertake your property inspections), so there’s a very little risk that you’d find yourself with a property that you’ve overpaid for or doesn’t meet your expectations.

Buying an off-the-plan investment property can be an exciting and beneficial venture in your journey to financial freedom. Contact our managing director via mike@starcentralmag.com to find out how we can make your property investment journey simple and fruitful and put you back into the driving seat.