Property Investing Can be a Difficult Nut to Crack

Property investment can be a difficult nut to crack. There are so many different potential factors to take into consideration that if you aren’t paying attention, you could miss the opportunity to purchase the perfect investment property.

There are some tell-tale signs that can indicate when a suburb or region is about to experience a property boom. After all, timing the purchase of your investment property with the market conditions will be beneficial in the long run for your returns.

The thing to remember about property is that it doesn’t exist in a vacuum. To take property investment seriously is to begin following the news – things like mining and industry, international production, the country’s economy, the state of tourism and immigration, the federal elections and more all have influence over the real estate market.

Reading the Signs

The challenge comes from knowing how to read these signs and making an educated guess about when the right time is to emerge into the real estate market.

For example, if there is news about an upcoming housing shortage, low vacancy rates and a stable economy, it could be a good time to consider taking the plunge and investing in property.

But if there are falling auction clearance rates, reductions in median house prices, or increasing interest rates, it might be better to steer clear of the market.

However, it’s good to remember that investment isn’t an exact science, and there could be merit in looking into options that go against the norm. Who knows, perhaps you’ll find a gem while everyone else is ignoring the area?

Doing market research is also a good way to predict where the next property hotspot could be. There are a number of monthly reports released by industry analysts like RP Data which often have the changes in the capital city markets. These are listed month-over month, as well as the more encompassing year-on-year changes.

Any areas that are populated by trendy cafes or local lifestyle spots are also good guesses for potential investment property. We buy houses in Cape Coral

Due to the high demand of these properties, if you identify an affluent area early in its development, you could establish yourself for the long haul and make some fantastic returns.

Couple this with more accurate property advice from local real estate agents and you could be well on your way to securing a fantastic investment property.

How Risky are Your Property Investments

Investment properties can make many of us feel financially secure, but it’s worth taking a close look at how well a portfolio stands up to any potential nightmares, to ensure you aren’t running the risk of losing everything.

The unexpected can always happen and things can go wrong, so investors are wise to consider asset protection from the early stages of their portfolio.

Unfortunately, on the whole, asset protection is not well understood by property investors. While most understand the importance of being protected, few actually take out insurance or fail to receive the full benefits associated.

Protection can range from the structure in which to purchase the investment, whose name to buy in or even the specific type of insurance required.

Without the correct protections in place, investors run the risk of losing everything if something goes wrong. For an investor or for that matter any home owner skimping on insurance is not a particularly good idea.

As an example, if someone was to be injured or worse at your investment property, and there was a lawsuit brought against you, it is possible that your insurance would not fully cover the amount of the claim.

In a case like this, if the properties are all owned in the investor’s own name, then all the assets can be claimed. This includes the investor’s home.

Knowing which name or structure to purchase an investment in can, however, be a confusing exercise.

It is always worth seeking advice from financial planners, accountants and solicitors that have experience with property.

They will be able to assess your overall situation and help you implement a strategy that is most suitable to your circumstance and your portfolio.

On the Way In

For investors that own, or are planning to own assets other than investment properties, such as a home, it is advisable to keep them separate.

This gives you some protection with claims only able to come against a single property.

There are typically three ways to purchase a property; these include buying it in your own name, in the name of a company or in the name of a trust.

The standard way to purchase a property, in the name of the investor, allows negative gearing concessions and is fairly simple to organise, but provides very little protection should someone sue.

Buying through a company is the next option. This allows the liability to remain with the company, while the shareholders are protected against the banks seizing their personal assets.

This leaves a third option, the trust structure. This can be hairy and complicated, but essentially, if you buy a property in a unit trust then you can apply negative gearing to it because the debt is still in your name and the distribution from the trust becomes income.

The other type of trust, a hybrid trust, is a mixture of a unit and discretionary trust, but banks will not typically lend to this type of trust. For this reason, it is not a popular choice with investors.

Seeking out More Information

Making changes down the track to different investment structures, or adding insurance policies after damages, can be costly.

For this reason, obtaining advice from accountants, solicitors, financial planners and insurance specialists are worthwhile steps before deciding on what is right for your portfolio.

When your portfolio holds your potential future financial security, it may sometimes be worth considering more expensive insurance packages for peace of mind.