The market is turning
If you’ve been putting off investing in property due to the state of the property market, it might be time to take another look. The July property market update is showing a drop in interest rates is starting to take affect with many suburbs starting to see property values start to climb again, in contrast to declines in previous months. Property sales are beginning to gain momentum again as buyers increase confidence with regards to interest rates and property value.
So what does this mean? Now could be the perfect time to secure the ideal investment property purchase, catching the shift in the market trend as it starts, instead of waiting until the market is flooded with buyers and property prices are increased. The opportunity to invest and secure a lower interest rate is indeed appealing, and there’s something to be said about being able to take your pick from available properties before they get snapped up.
You can view our current investment property listings here if you want to compare. With turnkey dual occupancy (double tenant) builds at unbeatable house & land package prices it might be hard to find a better investment opportunity.
Let’s talk about stamp duty
Stamp duty, for those of you that are new to the property game, is a general state government tax that is compulsory with the purchase of any property. From the 1st of July 2019, first home buyers are exempt from paying stamp duty provided that you meet specific criteria – gross income must be under $160,000 (without children), at least one of the buyers must live in the home within 12 months of the property purchase, and stay in that residence for 12 months.
If this isn’t your first property purchase, and you’re considering a dual occupancy build such as a duplex, there’s another way that you can cut your stamp duty bill. By building a dual occupancy or duplex home in lieu of purchasing an existing dwelling will save you considerable stamp duty. When building; stamp duty is calculated on the land contract value only. Stamp duty does not apply to building contract value. As an example, an investor purchasing an existing investment property in Queensland for $600,000 – would pay stamp duty on that transaction of $21,921. The same $600,000 investment applied to a land contract of $300,000 and a house contract at $300,000 would have stamp duty implications of $9,741. A considerable saving on stamp duty of $12,180.
The right property investment
A lower purchase price, or lower interest rates in a changing market isn’t enough to guarantee you high returns. Choosing the right investment property depends on a number of factors, including the right suburb that’s either well established, growing, and/or has the supportive infrastructure for growth. The best property is the property that you can get tenants for, at strong rental income rates, and keep them there.
The quality of the home is another big factor to consider- buying older homes opens you up to unexpected expenses for repairs, or the need for cosmetic changes to make the property attractive to tenants. There’s also the risk of unseen expenses, such as dodgy electrical wiring. New builds mitigate many of these risks, but require careful consideration as well – choose someone that has many years under their belt, a track record of satisfied customers, and quality guarantees in place.
Lastly, make sure you compare properties. You can find similar properties, in the same suburbs, with the same projected rental income generated, with anywhere from $5-50K difference in price. If you’ve found a property you are interested in, make sure that you compare with the competitors and get the best purchase price out there. Check for hidden, or add-on expenses. And then go with your gut, if you see any red flags, make sure you do your homework thoroughly before reaching into your back pocket. Think long term, think maximum returns and avoid overcapitalisation.
Read more about why dual key properties are a smarter option for investors here, or check out our most recent dual occupancy and duplex listings here.
Recent Comments