Adelaide property managers
For many Australians, achieving financial freedom is the ultimate life goal. And while there are many strategies for building personal wealth – such as investing in stocks or cryptocurrency, property is always a fool-proof path to economic independence.
At Saunders & Co, we are passionate about helping our clients grow and build their wealth through property. Seeing our clients achieve financial freedom is what drives us every day. We do this through strategic planning and research, a knowledge of both tax and property and a desire to see our clients succeed. Contact us here to start your journey to financial freedom today.
Creating wealth through property takes time, patience and a well-thought-out plan. That’s why we’ve put together our best tips and tricks for building your wealth with property.
What is financial freedom?
Having financial freedom means different things to everyone. For some people, it can mean having enough savings, investments or cash to afford a certain lifestyle. For others, it can be breaking away from living paycheck to paycheck and saving for the future.
The University of Canberra defines financial freedom as when your passive income (from your own business or assets) exceeds your expenses, giving you the freedom to achieve your ideal life.
Whatever financial freedom means to you, investing in property is a sure way to grow your wealth and live the life you’ve always dreamt of.
Why should I invest in property?
You don’t need to be an expert or an Adelaide property manager
It’s understandable to feel intimidated when it comes to investing, especially if you’ve never done it before. But investing in property isn’t just for the wealthy or for Adelaide property managers – anyone can do it. And it doesn’t require a large sum of money to start.
Many Australian banks will typically lend you 80% of the value of your home, less the debt you still owe against it. This means you can purchase an investment property if you have a steady, reliable income and equity in your current home.
Property is always a secure investment
There’s a reason why Australian banks will happily lend you up to 80% of the value of your property, and that’s because they understand that real estate is a secure investment.
According to Statista, the average value of Australian residential property has continued to rise over the past ten years. So not only will you receive a good return on investment (ROI), but you’ll also place yourself in one of the most stable markets out there.
The Australian Bureau of Statistics state that 66% of Australians own their own home with or without a mortgage. Property investors own the remaining 34% – making real estate the only investment market not dominated by investors. This shows that the property isn’t reliant on investors and therefore is unlikely to crash.
Claim many tax benefits
Owning multiple properties allows you to take advantage of several tax benefits, such as:
- Interest on the money you have borrowed for your investment property
- Tenancy costs
- Repairs and maintenance costs
- Depreciating assets
- Holding costs such as body corporate fees, gardening costs, building and contents insurance and pest control.
Discuss your financial position with a qualified accountant to ensure that you’re claiming your maximum legal entitlements.
Capital growth VS rental yield
There are two ways to grow your wealth with property: capital growth or rental income.
What is capital growth?
Capital growth is also known as capital appreciation or ROI. In a nutshell, it refers to the increased value of your investment property over time. Calculating your capital growth is easy – simply find the difference between the current market value of your property and the price you bought it for.
Capital growth appeals to investors because it requires little effort to achieve. In fact, you won’t need to do anything other than research up-and-coming Adelaide suburbs or areas with high capital growth.
Read: Adelaide property managers: Best upcoming Adelaide suburbs to invest in
What is rental yield?
Rental yield is the profit you earn from your rental income once all your overall maintenance and management costs are removed. To calculate your gross rental yield, you’ll need to:
- Determine your total annual rental income
- Divide your yearly rent by the value of your property
- Multiply that number by 100 to get the percentage of your gross rental yield.
A profitable gross rental yield in metropolitan areas is usually 3-5%. In regional areas, it can be 5% or more.
How to build your wealth with property according to an Adelaide property manager
Be organised with your savings
Now is the time to get organised and start savings. Treat the process as though you are running a business – use a spreadsheet to track all incoming and outgoing expenses. This will help you identify where your money is going and the best places to cut back on your savings.
Keeping across your finances will also determine your debt-to-income ratio – in simple terms, what size loan you can afford to pay. A typical debt-to-loan ratio is 28%, meaning that a lender will approve a mortgage loan where the repayments are 28% of your monthly income.
Recruit a Adelaide property manager to choose a quality property
Choosing the right property is essential to obtaining a secure ROI. Things to consider when searching for an investment property are:
- Location – a highly sought-after location will determine the rent you charge, the quality of your tenant and your vacancy rate. Choose somewhere close to the city, business district or universities.
- Low maintenance – properties that are easy to keep are the ones that attract stable, long-term tenants. Consider an apartment or unit that is large enough to feel comfortable but is also manageable.
- Costs and profit – Determine your financial goals and what you need to do over the next three to five years to achieve them. Does this property help you towards those goals? And remember, you’ll need to cover more than just the mortgage. So factor in maintenance and operation costs, as well as any taxes.
Repeat the process
Investing in property isn’t a short-term solution – it’s an enduring strategy that takes time to build. Slow and steady is always the best approach to property investment – so don’t rush into decisions that may not be beneficial.
At Saunders & Co, we want to help you achieve your financial goals. Let’s create the perfect strategy to achieve your dreams and grow your property portfolio. Contact us here to book a complimentary consultation today.