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Perhaps it would be an understatement to say that Australians have a love affair with property – evidenced by the popularity of The Block, now into its sixth season!
While all of the “glitz and glamour” can be a fun way to pass the time, it fails to accurately portray all of the hard work that goes into choosing a property investment, buying that property and renovating that property. If we get caught up in a flurry of emotions about what the building represents, we miss out on the chance to realise some fantastic financial gains.
There are a number of ways to achieve success as property investors but we cannot let our emotions rule our property investment decisions – and that includes decisions about whether to continue living in our own home rather than renting. Surprised?
I’ve often said that if you were to quiz 50 homeowners, asking them if they live in their dream house, in a dream location, only a small proportion would say that they do. I would then ask them, “Why not ‘rent your way’ into a better lifestyle, letting your old homestead foot the bill?”
This concept is startling to most people. To succeed in property investing you must challenge all you preconceptions. While your parents may have taught you to buy a house before you move out of home, in some cases property investors are better off renting. You may think it’s better to buy a property close to home, but most (if not all) property investors buy in areas that are in another city or state.
A fantastic benefit available to property investors is that the Australian Taxation Office allows property investors to reduce their tax obligations significantly.
When you apply for a loan to purchase an investment property, banks will calculate whether or not you’ve got the spare cash to cover your debts. This serviceability calculation is an important consideration when deciding how much (or even if) you will be able to obtain a loan. Your home loan is tossed into the “bad debt” side of the equation along with your unsecured debt (e.g. credit cards) and other personal loans.
Consider renting out your property – thereby instantly changing your “bad debt” (home loan payment) into “good debt” (property investment loan)!
While this option may not work for everyone – every one’s personal situation is a bit different – it is a very real and viable option that you should not ignore, simply because you are emotionally attached to your home and never want to rent again. In fact, we have had hundreds of clients do this every day!
This strategy can really supercharge your property investing efforts. Consider the story of how Positive Real Estate Property Investment Coach for Tasmania, Carolyn Weston used this strategy in her own life – turning 1 property into 3 profitable investment properties in just 12 short months – all on a very modest income as a single mum!
Take a look at Jason explaining a bit about how this strategy works.
If you’d like to find out more about this and other ways you can boost your property investing efforts, drop by one of our Property Investor Nights – they’re free, they’re fun and they’re held monthly all across Australia and in New Zealand. Attendees will receive a free investor’s tool pack, absolutely free. Find out more here!