You don’t have to be wealthy to invest but you do have to invest to be wealthy...
The biggest surprise for most people is how little it costs to buy and maintain an investment property. This is because with an investment property you have 2 people helping cover the overheads; the tenant (with OzInvest’s 10 Year Leaseback this is guaranteed) and the taxman.
Making the Most of Your Income
Property investment isn’t forced saving like superannuation, but a method of using rental return, asset growth and taxation benefits to build levels of wealth which the average income earner can’t accumulate over a lifetime from normal after tax savings.
Your income (and home equity) work for you rather than you working for them.
Our Average Property Price
We sell brand new properties in the medium price range of Australian homes between $350,000 and $550,000. This ensures our properties are priced in the middle of the market to attract the maximum number of tenants looking to rent, as well as the maximum number of buyers should you want to sell in the future.
Financing Your Investment
There are two standard ways of securing a loan to finance your investment.
The first uses your home equity and is the choice for most investors. The beauty is that it doesn’t cost you a single cent up-front. Banks and financial institutions will normally lend the full amount for an investment
property if you have 20-30% equity in an existing property you own (Eg: your property is worth $400,000 and the loan is only $280,000 - that gives you 30% equity to use to invest) and a regular income to help service the new investment loan.
The second method is a cash deposit of 5% - 10% plus purchase costs and a regular income to help service the new investment loan.
Alternatively - if you don’t have any of the above, an approved guarantor (such as a parent with equity in their own home) can also help you on the track to purchasing an investment property by allowing you to borrow against their equity so you don’t need a cash deposit.
Get a free finance health check to see if you are in the position to purchase a brand new investment property.
How Much do I Need?
The golden rule of property investment is to borrow as much as you can-naturally within your ability to service the loan. This is based on the principle of good debt; being debt that generates wealth.
The idea is not to pay off the ‘capital’, but to pay the ‘interest only’, which is fully tax deductible. How much you borrow will of course depend on the property you choose and your financial strategy.
OzInvest will guide you through this process and provide you with a qualified Property Consultant and Finance Specialist to determine the investment level appropriate for you.
What is Negative Gearing?
The key to your investment property is negative gearing.
The taxation department allows you to add up all the costs of buying and maintaining your investment property, including interest payments, and deduct those costs from the property’s rental income.
When the outgoings are greater than the income the property is negatively geared, these costs are deducted from your pre-tax personal income effectively subsidizing the cost of your investment.
So you pay less tax while at the same time your equity in the property grows as its capital value increases.
It Gets Better and Better as Time Goes On
As the rent grows each year the tenant contributes more, so the longer you hold the property the lower your actual percentage of outgoings. It’s the perfect medium to long term investment strategy.
Money Makes Money
Why is nearly 60% of our business repeat business from existing clients or word of mouth referrals?
Because they know what wealthy people have always known; the secret to building wealth is to leverage your assets.
Once you’ve got a foot in the door it’s simply a matter of time before you’re in a position to leverage the equity in your first property and expand your portfolio. The richer you get, the easier it gets.