Planning and research
Take the time to plan your property investment and don't rush into anything. Make sure you research the area you're interested in well by reading property articles, get information online, and through reputable property research companies.
Find out the area's average rental income, property price growth both past trends and forecasts, and what infrastructure is planned. You can also choose from the negative gear or positive gearing as a strategy through various online sources.
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Make sure you're ready to commit, as investing in property is generally a long-term strategy. You need to be aware that unlike other types of investments such as shares, you can't just sell part of it if you're short for cash at the time.
Consider the suburb the property is located in. Find out the proximity of local transport, supermarkets, schools, shopping centers and how far it is from the city center.
Negative or positive gearing
Negative gearing means the cost to maintain the investment – including loan repayments and fees, outweigh the income produced. This will lead to a reduction in taxable income.
On the other hand, positive gearing is where the income produced is greater than the outgoings – which can mean potentially high rental yields. Get advice on which type of gearing will produce the highest returns for your investment.
While there is a large percentage of people who rent in Australia, you need to ensure you're able to cover the mortgage repayments and other associated costs of your investment even if it's vacant for some time. It is therefore important to have a cash buffer readily available.