Canberra Mortgage Brokers have extensive experience in assisting clients establish investment property portfolios.

Ever wondered what separates successful property investors from highly successful property investors? They must have extensive investment knowledge, right?

How do they do it??

Here are the top 3 strategies employed by savvy property investors that, when applied to your own investment journey, will take you to the top of the property ladder…

1. Effective loan structure to minimise their debt burden and maximise tax benefits. In order to achieve this they…
2. Seek out expert advice in the form of a good Mortgage Broker and Accountant with experience in optimal investment and loan structuring. And finally, they…
3. Engage a reliable property manager to free up time for more profitable ventures, like building a wealth generating property portfolio.

Such things as focusing on a ‘cheap’ loan, rather than optimal structuring of a property portfolio can set borrowers up to fail from the outset. There are many factors to consider to ensure your first investment property is not your last.

Lenders will often offer borrowers a better interest rate if they keep their borrowing within 80% of property valuations. Everyone’s situation is different and whilst keeping the borrowing to within 80% sounds ideal, sometimes this can hinder the client’s ability to grow their property portfolio.

At times it can be better to forego the cheaper rate deal in favour of extending their LVR to 90% on the investment property as this may enable a client to increase the options on the investment purchase giving them a chance to purchase a property in a location that’s historically outpaced the averages in terms of capital growth. Alternatively, it may just conserve some of their equity to be able to add further properties to their portfolio.

Of course the new loan attracts a charge for Lender’s Mortgage Insurance (LMI), however this can be claimed as a tax deductable expense under the tax law. When it comes to investing in property, numbers are everything and if you are thinking of building a property portfolio, you need to make sure your finances are set up correctly to support your ambition. Essentially, you’ll need to think two or three properties in advance and reverse engineer that to structure your loan right.

Behind every successful investor stands an equally savvy team of experts providing guidance and industry insight. These are the people who will help you to construct your future fund with minimum risk and maximum reward.

Canberra Mortgage Brokers understands the intricacies of property investment structures and experience like this can be your greatest ally as you seek to build a profitable property portfolio.

Equally crucial to your team is a good Accountant

A good Accountant can save you thousands, offsetting your personal tax bill with legitimate and often lucrative investment related claims and deductions. Your Accountant needs to be proactive and up to date with all tax laws to ensure you gain the best possible return on your investment portfolio.

They also need to be investment property minded, meaning that they too see the benefits in investing in property. They need to be working together with you, ensuring that they assist you in achieving your investment goals.

A good Accountant will guide you on the entity that a property should be purchased in that will benefit you long term. It can, at times be beneficial to purchase a property in a Family Trust. There are a number of reasons for utilising a trust to purchase property.

In a family or discretionary trust the trust has the discretion to distribute income and capital to beneficiaries.  Family trusts are tax effective investment vehicles because profits can be split in different ways each year. The trustee decides how the profits are distributed at the end of each year. Profits can be streamed to ‘smooth’ the taxable income of the family: to a low income family member, rather than to a high income family member, and therefore take advantage of a lower income tax bracket.

A discretionary or family trust is a great investment structure for families as an intergenerational tool, assets can be handed down to children or grandchildren without incurring capital gains tax or stamp duty.

In the past, trusts were the investment vehicle of the rich, but in recent times, many Australians from all walks of life have begun using trusts to hold their assets.

While trust structures do offer benefits, they may not suit everyone or every situation. Some people who decide to buy their family home within a trust often don’t realise that the property may be liable for land tax and if they decide to sell and upgrade their home, the property will be subject to capital gains tax, where this would not be the case if the home was purchased in their personal names and was their principal place of residence.

Many Australians purchase investment properties not only for wealth creation but also to reduce their  taxable income. Negative gearing laws (which the government can change) allows an investor to offset the loss from a negative geared property against their personal income. If the property however, was bought in a Family Trust, they would lose this benefit as losses can not be distributed to the beneficiaries in the same way profit is distributed. Of course if the investment property was positively geared, then buying the property in a family trust may well be a good option.

Never underestimate the role a good Accountant and Mortgage Broker can play in assisting you with your property investment journey, particularly when they’re working together, looking out for your best interests. When loan structure and tax effectiveness comes together, you know you will achieve an optimal return on your investment.

Canberra Mortgage Brokers have often referred clients to Adele Strydom CA of SecFin. Adele is a professional, highly experienced Accountant. She is a property investor herself and is passionate about helping her clients. Canberra Mortgage Brokers do not receive a spotter’s fee or any remuneration from Adele when referring clients. What is important to us, is that you receive expert advice from a knowledgeable Accountant who is genuinely interested in you and your financial goals. Adele can be contacted via email adeles@secfin.com.au  or on her mobile 0411 819 945.

Property Managers

Engaging a professional property manager will free you up to focus on the big picture for your property portfolio. Many people are tempted to manage the property themselves to save a few dollars then become too busy to be working towards their next project.

While suitably qualified and experienced property managers make it look easy, managing tenancy agreements comes with a lot of regulatory responsibilities.

A good Property Manager can help determine the appropriate market rent for your investment, find good tenants to live in your investment, keep an eye on annual increases to optimise cash flow and minimise vacancies to keep that all-important income rolling in.

This is the key to becoming a highly successful property investor….

1. A good Mortgage Broker
2. A good Accountant
3. A good Property Manager

…….this will ensure you have the right loan structure, in the most tax effective way while receiving the maximum rental return.

The result will be a financial strategy that saves you time and money and achieves the type of financial success that sees you enjoy the retirement of your dreams.