Frequently Asked Questions
How do I know I can afford to invest?
PFW will assess your financial capacity to invest. This involves looking at your available equity or cash and your income and determining your serviceability against most financial institution’s lending criteria. We then produce an investment report, analysing the impact of an investment property on your cash flow and then stress test it to make sure you can safely invest, even if interest rates go up or your property is vacant for a period of time. This ensures you can hold your investment long term and capitalise on the growth.
Do I need a cash deposit?
If you already have a home then you may have equity in it that you can sue as a deposit on an investment property or properties. If you don’t have equity then you will need a cash deposit. Typically, you would need a minimum of $30,000 to $35,000 depending on the strength of your employment and what the banks will lend you. In some circumstances you may need less and some circumstances you may need more.
Can I use a self-managed super fund to buy property?
You may have the ability to role your super into a self-managed fund and purchase property in it. There are many guidelines and criteria involved to make this strategy successful. The benefits of doing this is that you won’t need a cash deposit as you can use the funds already in your super, and your super contributions will cover any out of pocket costs. The biggest advantage is in retirement you can sell you property and not pay any Capital Gains Tax (CGT). You would need to clarify all information regarding this approach with an accountant or financial advisor. We can provide experts in this area for you if needed.
Can I use property to reduce my tax?
The answer is yes you can as property investing is one of the best strategies for reducing tax. Commonly referred to as negative gearing, the advantage is that you have non-cash deductions such as depreciation which typically results in a theoretical loss from which you can claim against your personal income and reduce your tax. You should get the advice from an accountant to get advice in this area. We have accountants we can put you in contact with who are experts in this area if you need one. At Property For Wealth we believe that you shouldn’t invest in property solely to reduce your tax. Instead, invest in property to grow your wealth and use your tax dollars to help fund your portfolio.
How do I know I’m buying value?
This is one of the most common questions asked. PFW prides itself on sourcing the best investment properties available. We conduct extensive research on hundreds of properties to present great value options for clients. Clients are always protected by independent bank valuations and if there is an issue with a valuation then we will negotiate on your behalf or find another suitable property. The majority of PFW clients buy multiple properties, giving testimony to our ability to find great value properties.
How do I know I’m buying quality?
Our Real Estate division has vast experience in the industry and this has allowed over time to determine which builders and developers produce a quality product, who fixes problems if they arise and who is going to still be around in 10 years time. We have achieved 100% client satisfaction with the quality of the properties they have purchased.
What research is done to show me I am investing in the right area?
There are many different indicators that determine a good location for investing. PFW carries out extensive research when sourcing great properties. Some of these include population growth coupled with industry and job growth; schools, shops and public transport; infrastructure and future development; vacancy rates and rental yield; and many more. Our aim is to find properties that will give our clients as much capital growth as quickly as possible, while renting well and achieving high tax refunds.
Do I buy house & land, townhouse or unit?
Many people believe they should buy house & land because they believe land is what increases in value. While this is true in a sense it can also be a myth! It is property value that actually increases and land only becomes valuable if you can develop it and subdivide it. Normally when someone is starting a property portfolio, townhouses and house & land are typically a less risky option than a unit, due to fluctuations in body corporate fees and levies.
Should I buy old or new?
There are many reasons why PFW strongly believes in new property for investing. Some of these are less maintenance issues; builder’s warranty; higher rent return; less vacancy; higher depreciation and thus more tax effective; less phone calls from property manager; better resale; and many more.
How do I know my investment will be rented?
Again, PFW carry out extensive research to determine locations with low vacancy and good rental yield. When buying a new property, often you will have a tenant move in before you have even settled. PFW tend to avoid rental guarantees as these are typically factored into the price of the property. They are also used to attract investors to less attractive locations with often less capital growth potential, giving a false sense of security. We believe if proper research is undertaken then a well-chosen property should not need a rental guarantee. With vacancy rates very low in Australia, there should be no such thing as vacancy, only you are asking for too much rent.
Do I have to manage the property myself?
We strongly advise that you use a registered Property Manager to look after your property and its tenancy. Investors normally do not want another job just to save a few dollars which are tax deductable anyway. PFW will help appoint the appropriate Property Manager and help you with lease agreements.
How long should I be holding onto my property?
Our property investment philosophy is buying property to hold for capital growth. This type of strategy is an asset accumulation strategy and is recommended for achieving true wealth for retirement. The properties selected should be held for a minimum of 7 to 10 years to take advantage of property cycles. Ideally you should hold your properties indefinitely and keep adding to your portfolio.
How much does it cost?
There is no charge to use Property For Wealth’s services and all enquiries and discussions are obligation free. A commission is paid by the developer, similar to a real estate agent that gets paid by the vendor. A better comparison would be that of a mortgage broker where they find you the best loan and then the bank pays them. You might even call us a property broker. Property For Wealth does not work for or project market for any developers or builders, nor are we contracted to sell any particular property. This ensures the client is getting an unbiased selection of property that is ideal for their circumstances.
Questions You Should Ask
Is Property For Wealth licensed?
Yes, we are a Fully Licensed Real Estate Agent. We are an independent Agent and work as a link between you the purchaser and the seller/vendor. You may see many property investment companies that are the developer themselves and they are only interested in selling their own properties. Property For Wealth does not sell or develop any of its own properties. We are here to help clients buy the best properties that suit their investment strategy.
Should I wait until I have paid off my home before investing?
There should be no reason or need to do that. You potentially would cost yourself many years of capital growth by not investing. The reason people would consider this is because they perceive that an investment property would slow them down in paying their home off. If the right investment property is purchased and the right finance structure is set up then you could potentially use the investment to pay down your home mortgage even faster. Property For Wealth has many clients who purchase a cash positive investment property and use it to pay off their home mortgage in half the time, and they now have two properties growing for them.
