For all of 2015, in every Australian city, real estate auctions are producing record prices and this is in part due to current low interest rates and a soaring investment property demand. We often read the property investment success stories in the media but there are mistakes that people who are looking to buy a residential property as an investment can make. What strategies do successful property owners use to accrue real estate?
Property Purchase Advice
Viw Magazine interviewed Jeff Grochowski. a Melbourne based property acquisition consultant and we asked him what plans anyone looking buy real estate as an investment should use to minimise risk with building a property portfolio.
Local Property Knowledge
With years of experience and intimate knowledge of the fundamentals of capital city property investing, Jeff assists people who have made the decision to buy property and need to locate a house, apartment or unit that matches their investment needs.
As a leading licensed real estate and a part of the local property industry, Jeff is well placed to introduce his clients to a suite of select property industry professionals who share their specialised knowledge.
Here are some expert and common sense property advice tips from Jeff to assist first time and experienced buyers.
1) Avoid or get a second opinion before acting on property advice from your accountant, family or friends.
"It’s always given with good intentions but often the consequences are dire.
Too often, I hear accountants or family and friends giving property advice just because they have transacted a few properties during their life.
I see clients listening to this advice because they think that person has nothing to gain out of helping them acquire property. Usually the advice is not to purchase a particular property or to purchase a property in an area that the accountant, family or friends are familiar with.
Accountants are not licenced to give advice on property at all and family members or friends want to over protect you.
If the person you are speaking to has not transacted more than 200 properties before RUN LIKE HELL! Amateur advice is usually biased and based on their personal opinions. Only a licenced highly experienced property advisor, who works on a fee for service arrangement, can truly give effective property advice. Unless a person is a multiple property owner look further afield for an opinion."
2) Buy at a real estate auction or look online for a property to buy?
"At an auction you always prone to over pay. Cut out your market and deal direct with the vendor before anyone else becomes aware that the property for sale.
Serious buyers who know the risks do there property hunting by letter box dropping or searching town planning permits from the local council register: before properties are built!"
3) Buying in your local area
"Too many people buy in their local area because that’s all they know!
Melbourne should be considered a suburb as within that suburb, are many great deals. If you rush in and buy after looking in one local area, you have cut a out a large part of the market. Quite possibly there will be a better deal across town and unless you look, you will miss out."
4) Incorrect percentage of share in property ownership
"Many clients buy property for tax benefits. Other clients fail to realise that owning the property 50/50 with a partner may hinder this.
Often their lawyer and accountant oversee this error just the same. The highest tax payer should be the majority shareholder as they have the most tax to claim back.
Often, one partner is not working at all or is earning a small income that offers little tax incentives when negatively gearing property.
The highest earning and therefore highest tax payer therefore should own 99% percent of the property to maximise 99% of the tax incentives. Giving the other partner 1% shareholding allows for them to be a part owner just the same. Family law still applies so the % of ownership may be irrelevant in the event of a divorce."
5) Not having a buffer account
"Tenants don’t always pay on time> Bills come irregularly and maintenance charges are guaranteed. Having a $10K redraw facility on a property investment loan can be the difference between being forced into selling an investment property or being able to keep it long term.
When a tenant pays you back you top up the buffer account. Should you get tax credits at the end of the year you do the same. Your quality of life says the same too. After all, why skip dinner and a movie this weekend just because your tenant did not pay the rent."
About Jeff Grochowski
Jeff is the licenced real estate principal at Accrue Real Estate in South Melbourne.
Find out more at www.AccrueRealEstate.com.au