Property Investment Common Mistakes
As you make one of the biggest investment decisions in your life, you should be aware of the potential risks involved.
What might seem like a small mistake may end up costing you tens of thousands of dollars if you are not equipped with the right information.
To date, AllianceCorp has purchased over $1.5 billion worth of properties for our clients and has successfully guided each member on how to avoid the most costly property investment mistakes, which we have curated for you below.
Waiting For Change In The Market
Here at AllianceCorp, we always say it’s about ‘time in the market’ rather than ‘timing the market.’ If you are a new investor, sometimes it is better to establish yourself first rather than try and wait for the best deal.
The truth is, nobody has a crystal ball! And time spent waiting around for the lowest prices or hottest market may be better invested in building equity.
Therefore, when investing in property, there is often an opportunity cost, since the longer the property is held, the more time it has to grow in value. No matter how small, without action, this value will otherwise be lost.
Paying Too Much
For newly built homes, we don’t recommend buyers target the cheapest build possible as this can impact resale capabilities and create ongoing maintenance issues.
However when it comes to established properties, paying a high price may not necessarily result in a good return on investment. It is more likely that a mix of well-located, cost-effective investments will result in a higher rental yield than that of a single million-dollar investment.
Not Considering The Finance
Above all else, it is crucial that you understand the fundamentals of finance before investing in property.
More often than not, new or novice investors pay too much attention on where and what to buy rather than the structure of their finances, which is usually the reason why they can’t build a portfolio bigger than two properties as opposed to five – limiting their ability to achieve their financial goals.
By working with professionals, such as the team at AllianceCorp, our Property Wealth Planners are equipped with Mortgage Broker certifications and are well-versed in structuring your finances to build wealth over time – safely, securely and profitably.
Being Unaware Of Tax Benefits
It’s not uncommon for buyers to miss out on tax incentives, which can be tens of thousands of dollars, simply because they didn’t know about them!
Before investing in property, it’s crucial to fill your head before you fill your pocket as this can make a significant financial difference.
Here are some of the tax incentives available:
Depreciation
Depreciated cost refers to the value of an asset minus all of the accumulated depreciation that has been recorded against it. In the instance of property investment, any property that generates income may be eligible for considerable returns in depreciation deductions. In fact, most investors can claim an average of $5,000 – $10,000 in the first full financial year alone.
Capitals Gains Tax (CGT)
If you sell your investment property within 12 months of owning it, you are required to pay CGT on the profit of that sale. However, if you own the investment property for more than 12 months before selling, you are eligible for a 50% discount on your CGT which means you will only need to include half of the capital gain in your tax return.
You can find more information on the tax benefits associated with property investment here.
Not Getting Professional Support
When making one of the most significant financial decisions of your life, it’s imperative to seek professional support. Whether you are purchasing a house and land package or an established property, it’s essential to be equipped with the latest information.
Why Choose AllianceCorp?
When starting your property investment journey, you want to have someone in your corner that knows the common mistakes to avoid in property investment – and that’s where we come in!
AllianceCorp offers a number of services and free resources provided by our expert team that can help you on your journey to making the best investment! Check out our masterclass or book a free consultation with one of our Senior Property Wealth Planners to get started today!