Perth, WA -- (SBWIRE) -- 11/27/2013 -- The property market in Western Australia has been booming with rents and housing prices rising significantly in the past year. While values have risen, there are still deals to be had in today’s environment.
Perth home builder Aveling Homes offers 4 tips for successful property investments.
1. Target Growth
Rental income is nice but capital growth gives the best return over time. Aspiring property investors should keep up with the news and understand development trends so they can spot up and coming neighborhoods. Access to amenities, schools, and highways are musts for a successful neighborhood.
Demographic data (available from the Australian Bureau of Statistics) is also extremely useful. Investors should look at income levels and growth, as well as employment figures and occupation type.
2. Negative Gear
Targeting areas with growth potential can sometimes mean monthly payments that aren’t fully covered by rent. Thankfully, Australian law allows investors in these situations to deduct the monthly shortfall from their annual income at the end of the year to save on taxes. Negative gearing isn’t by itself a long term strategy but it does reduces the financial risk for property investors.
2. Don’t Be Afraid to Be Positive
While negative gearing is a nice benefit of property investment in Australia, it’s not the only option and not alway the best. Having rental income exceed monthly mortgage payments is obviously a good position to be in. For first time investors who may not have a lot of capital to throw around, positive geared property helps ensure they’re able to stay current on their debts and get a return from day one.
Many investors like to buy established property for its book value, but in today’s environment building an investment property is a smart choice. The Australian Tax Office allows for tax benefits from depreciation on building, plant and equipment. Since depreciation is cumulative, the tax benefits on a new home are greater than that of an established home that’s been depreciating for many years.
4. Borrow Smart
Interest only loans are where the monthly payments go purely towards interest and don’t decrease the principal of the loan. For residential buyers they’re generally not recommended, but for investors they make a lot of sense. Negative gearing only counts on the interest part of the mortgage payment.
That means interest-only loans allow property investors to pay a minimal amount monthly, and also get a nice tax benefit yearly. At the end of the interest only period if the property grows in value, the investors can sell for a profit, which was earned with minimum outlay.
Property investment can be intimidating at first but with the right approach and the right team, it’s a solid way to get a healthy return. Experienced home builder Aveling Homes offers a variety of single and multi-unit dwellings for the aspiring property investor.
About Aveling Homes
Aveling Homes is an award winning home builder based in Perth dedicated to providing exceptional service. Find out more about our display homes and our house and land packages by contacting one of our representatives today.
Visit the Aveling Homes website at http://avelinghomes.com.au for more details about our services and available financing options for first time home buyers.
Aveling Homes Contact Information
24/7 Metro Sales: (08) 6144 1000
24/7 Sth West Sales: (08) 9795 3444