There are two types of income generated from investment properties, the first is rental income (yield) and the second is the increase in property value over a period of time (capital gains). You need to decide if your investment is a long term strategy that will give you a high capital gain over a number of years or if you are looking to earn income now from a high rental yield.

Negative gearing is where the cost of owning a rental property is greater than the income earned from the property each year. This creates a taxable loss, which can be offset against other income such as your salary. Positive gearing is where an investment property earns more in rental income each year than it costs to own the property. As this profit is taxable, you will need to set funds aside to cover the tax you will be required to pay on your investment each year.

Developing a clear budget prior to purchasing an investment property is essential. The costs associated with an investment property are different to the costs of purchasing your own home. You need to consider there will most likely be some periods of time when the property is not tenanted so you will need to ensure you can cover the full cost of your repayments, repairs and maintenance without receiving a rental income during these periods.

Investing in property offers many potential tax benefits, such as expenses associated with any investment property that is tenanted or available for rent as well as interest paid on your investment property loan. It’s essential to get professional tax advice specific to your circumstances prior to making an investment. The cost of your tax advice and having your tax returns professionally prepared for an investment property is tax deductible.
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The following expenses can normally be claimed on tax for your investment property: Real Estate advertising for tenants
Property management fees
Accounting fees
Borrowing costs ie: loan establishment & registrations fees as well as valuation fees
Interest payments and ongoing loan fees
Stationery, phone costs, book keeping fees
Travel relating to the property Council rates, body corporate fees, land tax and strata fees Property maintenance & repairs Insurance premiums
Pest control, cleaning and gardening Utilities that are paid by you ie: electricity, gas and water
Depreciation of both the property and contents such as fridges, stoves & furniture

Choosing an investment property needs to be a financial decision, not an emotional one. It’s imperative to think like an investor and select a property that will suit your financial strategy. Rental yield, capital growth and a property that appeals to your target tenant need to be at the forefront of your mind.
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If you are not confident in making the right choice on an investment property, you can use the services of a buyers agent who is a property investment specialist. The team at Assured Lending can put you in touch with local buyers agents.

Location is the key to investment property success. You need to research potential suburbs looking at things like, population growth, local housing prices, rental yields, rental demand, planned developments for the area, transport links, proximity to lifestyle features and business districts, schools, employment and suburb growth potential. Assured Lending are able to provide you with a range of  free reports to assist you when researching locations.

The type of property you purchase for an investment will obviously depend on your budget and investment strategy. You could consider a  house, unit, duplex, holiday rental or defence force housing.  You’ll also need to look at advantages and disadvantages of buying an existing property or buying off the plan. The type of property you buy will determine the level of rent you receive and may involve different upfront and ongoing costs. Think about the tenant you are targeting and research the demographic of people currently living in the suburb so you can select a property that suits their needs.

Having an investment property home loan with the lowest interest rates and fees and the flexibility to suit your needs is just as important as selecting the right investment property. It is essential to shop around and make sure you are getting the best deal possible on what is likely to be the biggest financial commitment you will ever make.This is where the financial experts at Assured Lending Mortgage Brokers come in. We will compare the loan products of over 40 of Australia’s leading lenders, to find the investment loan that is right for you.