The media is full of hype over what might happen if Labour wins the next election with a policy allowing negative gearing for new properties only or the Coalition decides to tamper with negative gearing.
So what! The key task of any plan to create property wealth is capital gain. Capital gain is a product of choosing the right type of property in the right location.
Many investors are often influenced by the advice of marketers regarding the potential gain or high rental yields available at locations which no experienced advisor would ever recommend.
I do not care how great they claim the rental yield may be or how potential the gain is. If the appropriate amount of research has not been carried out the investor is often staking the future success of the investment on the advice of a salesperson whose only objective is to make a sale, not to provide the investor with the information sufficient to make informed choices.
You may be developing a plan to buy an investment property which, in say 20 years, will provide an important part of your retirement financial security. What will the location be like in 20 years? What is the plan for the future by local, state and federal governments? There are many what ifs that must be answered.
Sure – high rental yield and any taxation allowances provide a reduction in the cost of the property.
Let’s assume that the negative gearing period is over and we must depend upon the capital growth and rental to provide the benefits we seek. Choice of investment property will then depend upon the quality of research and advice provided to the investor. (Cheers)
The best properties in the best locations always attract top rent and top prices for type and location at sale time.
They do not have to be highly priced – this principle applies to all properties. The investor and the property manager can jointly sustain the value of the property with strict tenant control and professional attendance to gardens and lawns semi-annually. I always recommend checking out the property managers and other owners in the development regarding the care of the landscape for apartments and townhouses
There is a variety of wealth creation pathways however, for the average person property must still be the best bet for their future financial wellbeing, providing they are well advised and have developed a plan setting out their wealth creation objectives, strategies and action plans.
- Solid bricks and mortar, you can touch it, and you have total control of the asset.
- Favoured by lenders, Banks will lend you more money with property than any other asset class.
- Low level of volatility and low downside risk.
- 50 years history of continuous growth in the capital cities (between 10-12% average annual growth) using little or no cash, and leveraging through the banks money
In the interim let us hope that Labour does not have the opportunity to initiate this move and that we investors may continue to build property portfolios to augment our retirement financial security rather than depend upon a pension which may not even exist 20 years from now.
To your future planning
Don Duncan F.A.I.M.
Don is the Principal Consultant at Meredon Consulting, with over forty years experience in developing successful residential property investment strategies, and extensive experience in the financial sector, Don is uniquely qualified to provide you with the best property investment advice available. He is supported by experienced property investment consultants in both Brisbane and Sydney. Don is a Fellow of the Australian Institute of Management, and a qualified Trainer of Trainers. In addition to this Don has also been an active member in the community, he was a member of Rotary International and Past President Toastmasters Territorial Council of Australia.