The Hidden Truth about Successful Property Investment in Adelaide
By Simon Rodger (4 Min read| Beginners)
So, you have reached a stage where you are thinking about Property Investment here in Adelaide – Great! BUT, are you unsure of whether or not the timing is right for you to step into the property market and make this life changing decision, due to YOUR:
individual financial position
stage of life
attitude towards risk
existence of other wealth creation strategies
Success in the Adelaide property investment market has a lot to do with timing. To find out if the time is right for you, let us guide your thought process to find out if you are ready.
So, let’s be clear with the following questions:
“Do something with your Money!” if it doesn’t come from your family or friends it might come through the bombardment of property spruikers on the radio and social media. It is good for starting a thought flow, but it definitely is NOT THE RIGHT REASON to Invest in property.
Also - Be wary of barbecue advice, especially when friends and family talk about how many properties they own. Almost every story you hear at a BBQ is exaggerated or is missing key information. If the person isn't a professional charging for their time, then take it with a pinch of salt.
Now, the right reasons for considering property investment are:
- Property as part of a long term, diversified wealth creation, tax minimisation and investment strategies
- Planning for retirement
- Downsizing or accommodation for your kids who are or will be finding it much harder to get into the property market these days
House, townhouse or apartment? New or old? Off the plan or already built?
We may all have our individual preferences; however, the key is to understand the risks and benefits of each option available.
Did you know that Multiple Family and Lone Person households in Australia seem to be increasing and one family households declined by 5% over the last 25 years?
It is worthwhile investigating demographic trends and government policies that dictate how future generations and populations will be living.
The number of so called ‘hot spots’ drives us crazy. Once people are talking about ‘hot spots’ it is too late anyhow and surely, they can’t all be ‘hot’. Lifestyle trends, population trends, infrastructure and education investments can all combine to be good indicators. Whether you would personally live there or not is less of a consideration, although it’s generally better to invest in a location where there are good owner/occupier numbers and low rental vacancies. Also, the specific location in the suburb can be more valuable information than the general suburb itself.
Now that’s the million-dollar question! Property prices do move in cycles, and each capital city can be at different stages of the cycle for various reasons. Many investors quite rightly look at what’s happening in the market to help guide when to get in, but many unfortunately forget to look at their own personal circumstances to help determine when the timing is right for them! This again highlights the need for a decent plan and a good understanding of what you want to achieve overall – not just for one specific piece of real estate.
Get some advice! Develop a plan and write it down! Consider the structure and entity that will be borrowing money, understand borrowing constraints, understand your tax position, retirement plans, family situation – and the list goes on…! It is not necessarily complicated, but it is very, very important to do it right and to partner up with someone who has sufficient expertise (not just ‘experience’) in property, financial planning, tax, finance broking and insurance.
How much $$ do I need?
Generally speaking it is all about your ability to save money. As a rule, you should have 15% of the price for the property in your savings account. And from over 20 years’ experience we tend to advise to have a further buffer as an emergency fund, to get yourself out of trouble in case anything should go wrong. When it comes to affordability, a good financial strategy is key, together with strong tax and loan structuring advice.
For more information including our thoughts on interest rates, please call us today on 08 8303 0300.
Published October 27th 2017