Structuring your investments
There are many things to consider when thinking about investing in a property.
What type of finance do I need?
Have you spoken to your accountant about whether you need to invest in commercial or residential? Should it be positively or negatively geared?
Will you or a Property Manager being managing your investment?
Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with negative gearing.
The following factors should be taken into consideration when purchasing property as an investment:
The likely return – yield and capital growth
Buying and selling costs
Cost to borrow money, ie interest rates
How attractive the property will be for likely tenants or future buyers
Tapping into your home equity (or equity from another investment property), is a great launching platform for buying an investment property. Say your home is valued at $500,000 - you owe $150,000 on your mortgage (thereby giving you equity of $350,000) you may want to invest a portion of the equity into another property.
Usually the existing loan and the new portion of the loan would be refinanced, however it is common to split these in order to keep the non tax deductible amount clearly differentiated from the deductible investment amount. Your accountant should be able to help with this.
Peruse the calculator page for more assistance.