4 articles that give investors a reality check about the property market, worldwide

The property market is competitive, no doubt about that. Internationally and locally, investors are getting priced out of one market and moving onto another, before the same cycle repeats itself. Australia’s had a ‘golden age’ of affordability, but in recent months that rosy period has come to a screeching halt.

 

 

Sydney and Melbourne’s property markets are slowly outpricing potential investors thanks to rapid employment growth, among other reasons. While prices in these cities have risen over 10%, Brisbane’s growth remains in the single figures. But is it too good to last?

 

The UK has one of the priciest property markets in the world, and the younger demographic is certainly feeling the pinch. This is all thanks to changing work conditions, the drama of Brexit, and the ‘silver generation’ using their experience to snap up hot real estate.

 

This is an opinion piece, but the context is relevant. This debate was sparked by investment professional Tim Gurner’s scathing observation about millennials and their lack of potential to crack the property market. Why? Because they love $4 coffee and avo smash everyday. Even though the debate has raged back and forth, it’s put the way we work, save, and spend in the spotlight and there’s no sign of it slowing down.

 

There’s a glut of apartments in Brisbane, and developers are so desperate to sell them they’re offering incentives to buyers. This comes as a result of  oversupply and minimal demand. ‘Offers’ include the likes of free rent (for a period), vehicles and free avo toast everyday for a year. That’s probably another house deposit…or a new couch.

 

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  1. 5 ways to find the best property investment
  2. Less than 1% of Investors Succeed in Building a Property Portfolio

Don’t make these 6 mistakes if you want the best property investment possible

There’s no one-size-fits-all when it comes to finding the ‘best’ property investment available. Ideally though, you want it to make you money through rent paid by tenants. It doesn’t matter if the property is residential or commercial, a house or an apartment. To make sure you find the best property investment for YOU and your portfolio, we compiled these five tips.

 

  • You don’t have professional help

You need unbiased professionals to help you handle the financial aspects of property investment. Mortgage brokers help investors daily, giving them advice about home loans and ownership structures. You’ll also need your accountant on your side. Find one that specialises in property accounting so they can lay out a plan and a budget based on your income and credit.

 

  • You don’t have an end game

Nobody invests in property just for the heck of it. There’s always a plan in place for each property in the portfolio. There should be a backup plan, too.

Some get into property investment to boost their retirement savings or retire early. Others want to get out of their day job after earning income through buying, renovating, and selling homes. Don’t walk into the property investment game with short-term goals.

 

  • Your properties are all in one place

Yes, you’re more comfortable buying ‘close to home’ because it’s familiar territory. But this means other investors are buying you out of the locations that really make the big bucks.

Less than 20% of investors have two properties or more in their portfolio. Less than 1% own six. This means 99% of investors are playing it safe and are missing out as a result. There’s no reason why you can’t have a property in Tasmania or another in Perth. Get out of town when it comes to looking for the best property investment.

 

  • You haven’t looked at trends

Get familiar with complicated terms like ‘yield’, ‘median price’, and ‘cash flow’. Trends like these will guide you in making great purchases.

 

  • …or done your homework

Have you done any research into the area you want to buy? Did you check if there’s any upcoming developments like shopping centres? What about schools and access to public transport?

If you don’t do your homework, you’ll end up with a property investment located in an area saturated with others. You’ll leak money instead of save. This is why it’s important to look at trends and branch out from your ‘home base’.

 

  • You can ‘manage on your own’

If you can, good on you. But the task of picking tenants as well as monitoring them, setting rents, and the like takes time you don’t have. Plus, you’ll get emotionally invested. Hiring a property management team is a better option.

Tying your depreciation schedule to your tax return in Australia

Your depreciation and tax return in Australia is your best asset for putting money away into your bank account. It doesn’t matter if you live and work overseas. Your Australian revenue is guaranteed when you have investment properties and professionals taking care of them.

 

When you purchase investment properties, whether commercial or residential, you must always declare the income they bring you. Returns are minor in the beginning thanks to negative gearing. This happens when the overall expense of maintaining the property costs more than your rental income. But you’ll get your money back over time thanks to depreciation and claiming other items on tax.

 

As your property, and the items in it, depreciate over time, it equals more money in your bank account. You’ll receive the maximum benefit when you get a depreciation schedule from a professional. We have a lot of clients asking about this process and how it works. This is what we tell them:

 

  • Buy the property and finalise the settlement
  • Call Deppro and schedule a visit
  • The quantity surveyor visits the property, takes pictures, and makes notes
  • Answer any questions the surveyor has and provide the necessary documents
  • Your depreciation schedule arrives

 

When you receive your depreciation report, hand it over to your accountant who manages your tax return in Australia. They’ll amend past returns and use the report to get you the best amount back on future ones.

 

It’s easier than you might think to tie your depreciation schedule to your tax return in Australia. Of course you’ll be affected by negative gearing (unless you snapped up an amazing property), but depreciation and other tax deductions over time will earn your money back. Once the quantity surveyor has done their job and the report is yours, hand it over to your accountant. They’ll make sure your investment pays off.

5 ways to find the best property investment

The idea of property investment is exciting. Whether you’re looking to expand your business or you’re an investor wanting to add another portfolio, the anticipation outweighs the dread…most of the time. People who are new to the property game often find themselves disappointed and reaching too far outside their budget. How do you avoid this yourself?

 

  • Be realistic

You have dreams, but reality will give you a rude awakening if you’re not careful. Working towards a goal slowly and steadily ensures stable growth. If you peak too high, too fast it will all come crashing down. Not meeting payments, having bad tenants, or finding faults with the property after purchase are all possibilities if you rush into buying.

 

  • Hunt everywhere

Even though most people still look for their next property investment online, the newspaper listings are still a valuable resource.

When we say hunt everywhere, we also mean broaden your search radius. Seasoned property investors and business owners have places all around Australia. Search online for the best growth suburbs in Australia, you’re bound to see something that ticks the boxes. Which leads us to the next point.

 

  • Write a list

This will keep you on track, and honest. Whether you call it a purchase plan, a property checklist, or something else, make sure it’s on hand when you’re looking at places. If you’re concerned about depreciation, add these to the list:

  • Has any renovation work been done recently?
  • Are the fixtures in good condition?
  • Will this still give me income X years from now?
  • What’s the area in meters squared?

 

  • Turn off your emotions

This step is crucial. Letting your emotions get into the mix leads to burnout and heartache. When things don’t turn out the way you hope (you lose the bid, offer rejected, etc) of course it’s disappointing. But you keep your chin up and carry on. The best property investment for you is out there; you just have to look a little harder.

This point ties into point number one about realism. If you’re an investor looking for rental properties, don’t think about the hunt as looking for your dream home. Not even if it’s ten years down the track. You’re looking for a place that will attract tenants and generate income for you. The best property investment for you might be a home or an apartment that doesn’t  suit your tastes, but will be perfect for someone who rents it from you.

 

  • Get the professionals on your side

As soon as the property is settled, call Deppro to have a quantity surveyor inspect the property. You’ll receive the best, most accurate depreciation schedule if they see the place in its original condition.

Also invest in a property manager to find tenants (again, avoiding emotional investment). They’ll manage the bulk of caring for your portfolio. After you receive your tax depreciation report, hand it over to your accountant. They’ll make sure you get the maximum refund every year, contributing to your coffers so you can keep growing.

5 types of property investor

There’s a common perception that a property investor lives the high life. Their portfolio rakes in hundreds of thousands of dollars that funds an extravagant lifestyle others can only dream of. This is true, but only for a small number of them. One type of property investor likes to boast about their success, others prefer to keep it quiet. Do any of these traits look familiar?

 

The dreamer: This type of property investor has big visions of wealth, owning a large portfolio, and making it in the ‘big leagues’. You’ll find them constantly looking at property listings and researching suburbs with good growth. It’s good that this investor does their homework, but their dream might cost them if they put down a deposit they can’t afford. In property, you must spend money before you can make it, something that this type forgets.

 

The renovator: This property investor looks at the old and outdated, sometimes the crumbling, and sees something beautiful: potential. Occasionally they’ll buy the home for the sake of the land because it’s in a good location, and demolish the house. They’ll build it up again into a property that will attract tenants and give them a better return. This type of property investor, though, has sometimes  watched too many renovation shows and has visions of doing everything themselves. That’ll turn the investment property into a money pit rather than an asset.

 

The silent assassin: You’ve seen agents and reps on the phone at auctions communicating with their clients and making bids. This type of property investor has the experience to know what they want. They’ll trust a rep to inspect the property on their behalf and put down money at the auction.

Another side to this investor is they’ve often got a full or part-time job that keeps them busy. They don’t boast about their property prowess. When they turn up at the auction they’ll wear sunglasses and stand at the back of the crowd. They look like a silent observer…until the bidding begins.

 

The wise: This property investor isn’t necessarily older, but they’ve got experience in the property market. They were born into it, had an early interest, or just educated themselves. The wise property investor does their research, knows the best growth suburbs, and has their property manager on speed dial.

 

The one-home ponies: This type is probably your parents, or someone else’s. After the children leave the nest, their parents move into a smaller home. Some will sell the family house, others will renovate it and lease it out to tenants. They’re an ‘accidental’ investor, and don’t think of hiring a property manager or getting a depreciation report until someone else suggests it.

What NOT to do before and after getting your property report

One of the great successes you can make as an investor is getting your property report done and dusted to accurately list all claimable tax depreciation items. By having a tax depreciation schedule, you’re getting more money in your tax returns and that can take you to your financial goals faster. But if you make mistakes like these, it’ll end up costing you instead.

 

Maintenance

Ideally, you want to have purchased a property that’s recently undergone renovations. It’s fixtures are relatively new and you can claim depreciation on work the previous owner has done.

If you did your homework before signing on the dotted line, then there’s not much cause for concern. But a crumbling, ‘project’ property will drain the money faster than you can earn it back because you’re spending it on new fittings and appliances.

 

Tenants

When you submit your property report to your accountant, the next step is to hire a property manager to look for tenants. Don’t do this job yourself; it makes the hard stuff more complicated down the road. For example, what happens after you get friendly and the tenants do something that would normally get them evicted? Are you prepared to look them in the eye and ask them to move out?

Letting a property manager choose the tenants will save you an emotional and financial headache. A good tenant won’t cost you money because they treat your property with respect and follow the rules.  

 

Investment Strategy

Like any business owner, you’re hiring professionals like depreciation specialists to take care of your property report. You’re paying property managers to handle your asset so you can focus on expanding your portfolio. All of this is part of an investment strategy. Don’t treat the property game like a hobby; it’s a business.

Having success in property investment means having a level head and doing the right things. By not buying old, crumbling buildings and by letting someone else screen tenants, you’re on your way to becoming a successful businessperson. Tax depreciation, property reports, and other formal matters are hard tasks, but worthwhile when you’re creating a successful brand. Having the professionals, like Deppro, on your side makes it easier.

A beginner’s guide to a depreciation schedule

A depreciation schedule is a necessary tool that every property investor or business owner must have if they want to pay less tax and recover debt faster. It has been said that in some circles up to 80% of investors don’t know that they can depreciate their investment property, some don’t even understand what depreciation is.

 

Claiming the property and the items inside it on your tax return will give you a higher return, but not straight away. Items depreciate over time, and their depreciation costs will increase the longer an investor owns them because they’re given a ‘lifespan’ for their usefulness. Any item, from the fire alarm in the ceiling to the carpet on the floor, depreciates in value. Items under $300 are instant write-offs.

 

The depreciation schedule

It always contains two categories: capital works, and plant and equipment. Capital works are part of the property itself and any renovations done to the structure. Work done to the kitchen, the carpets, and even the patio gets included in capital works depreciation.

 

The plant and equipment category is comprised of items that can easily be moved out of the home or commercial premises. Whitegoods, furniture, electricals, and even rubbish bins are included. This is the category that some investors have trouble with because they don’t know they can even claim rubbish bins as an instant write-off.

 

The depreciation calculations, though, rarely get done by the investor who owns the property; this is a job for a quantity surveyor. After the property settlement, the new owners must get a surveyor in as soon as possible so they can make an accurate assessment. They’re the ones who write up the depreciation schedule. They calculate the value of the items in the home and how they’ll decline in value over time. Depreciation schedules last forty years, starting from the settlement date.

 

Investors don’t have to worry about working the depreciation schedule into their tax return, either. Once the quantity surveyor has completed their assessment, the investor’s accountant can handle the rest. They use the schedule as a guide to assist in making an accurate return. They’ll do their best to make sure their client pays as little tax, and gets the best refund, possible.

 

Business owners without a depreciation schedule are missing out hundreds of thousands of dollars over the time they own a property. Contractors like Deppro come to assess what their clients can claim, and work hard to ensure they get the maximum amount back.

Quantity surveyors and your tax depreciation schedule

Who writes your tax depreciation schedule? Your trusted quantity surveyor does. You can’t get a schedule without them for a variety of reasons.

 

How early can I engage Deppro as my quantity surveyor?

You can engage Deppro very early in building projects. In fact quantity surveyors are more often associated with building and construction during initial project stages. They look at the building plans and the list of materials required, and from that they estimate costs.

 

Quantity surveyors work in a field that has the potential to take them around the world. Where there’s a building site, their services are required. They’re in their offices the  majority of the time writing reports and analysing information, though site trips are frequent.

 

Education

Before they work on building sites or for tax depreciation firms, an aspiring quantity surveyor attends university for their bachelor’s degree. These studies centre around urban development, construction design, engineering, and some economics specialities.

 

In Brisbane, for example, students enrol in a Bachelor of Urban Development (Honours) (Quantity Surveying and Cost Engineering). Students learn about cost engineering, business and tax law, architectural design, and more. By the end of the course they’re versed in building design, able to handle costing queries, and make effective property analyses.

 

Why not my accountant?

Your accountant is there for your financial needs. It’s their job to give advice and handle your statements, invoices, and returns. They aren’t licensed or versed in how to value property and all of the specifics of materials inside.

 

The ATO won’t accept a tax depreciation schedule from anyone else. Deppro’s quantity surveyors are qualified to make site visits, analyse the data and estimate the costs. They use critical thinking and analytical skills when looking over a property. Through this you’re guaranteed a thorough report that gives you maximum benefits.

 

The tax depreciation schedule is a ticket to the best return for anyone with an investment or commercial property. It contributes to your tax return, boosting it by tens of thousands over the time you have the investment in your portfolio. Deppro’s quantity surveyors are highly educated, accurate in their estimations, and accredited by the ATO, setting you up for nothing but success.

Depreciation on investment property makes life easier

Investors and business owners order depreciation on investment property so they can efficiently handle expenses. Many investors, though, don’t know about depreciation and how it can make their lives easier. It absolutely pays off financially, and there’s other perks as well.

Most people don’t think about taxes everyday, but the professionals do. Ordering a depreciation report on investment property removes a lot of guesswork and takes the pressure off their minds. Thanks to the experts, they can make accurate deductions for the time they own the properties in their portfolios. Deppro’s reports last forty years, long enough to hold the property and sell it on.

Access to a depreciation schedule is easy for any investor, whether they’re just starting out or played the game for a while. Companies like Deppro exist to help people at any stage of their investment game. They’ll explain how the report works, how items are categorised, and what to do after the clients get the depreciation schedule in their hands. This makes life easier, especially for newcomers, because the experts are taking care of everything.

When you ask the experts for help with depreciation for investment property, you’re also getting an education. Deppro guides their clients through the process of ordering the report and how to use it to maximise deductions. You’ll also learn what a quantity surveyor does, and what items will fall under ‘capital works’ if you ever renovate your property.

When you get expert help for depreciation on investment property you’re making less work for yourself. You get a depreciation schedule that lasts for decades and saves you worrying about accurate numbers. The report, and the expert help that comes with it, is accessible to anyone at any stage of building a portfolio. You’ll also learn a few things along the way, like how to use the report for taxes, and whether you can claim the new carpet for the office as a deductible expense (yes, you can).

What everybody ought to know about tax depreciation

There’s experts out there, like Deppro, who efficiently handle tax depreciation so their clients can get the best possible return. Seasoned property investors know about tax depreciation and how to claim deductions every year. This article is for the first-time investors wanting to get in the market, but not quite able to wrap their head around depreciation.

 

  • It’s a claimable expense

Tax depreciation is deductible from your income, giving you a greater tax return.

 

  • You need a depreciation schedule

This is absolutely necessary so investors and business owners can claim the maximum amount over time. Depreciation schedules begin from the settlement date and estimate the value of taxable items over their useful lifetime.

Getting a depreciation schedule takes the guesswork out of evaluating items in your property as the years pass. Quantity assessors, like those who work for Deppro, will do an inspection. The depreciation company uses these to write a report and a depreciation schedule. These are delivered to the client within the month. This often overlooked information helps investors significantly boost their returns.

 

  • You can buy more properties

The money earned back from tax depreciation lessens the debt investors take on when they buy property. It’s common for them to use the extra funds to expand their portfolio. Once they do, they repeat the process of getting a depreciation assessment.

 

  • The report isn’t an annual thing

The quantity surveyor will only need to visit the property once. They’ll take pictures and make notes before heading back to the office and drawing up the report, outlining the values of the items they see. If you do renovations on the home, though, you will need to update this report for an accurate schedule. You’ll get in trouble with the ATO if you make a claim with false information.

 

  • ATO approval

The depreciation schedule must come from a registered tax agent so that it complies with guidelines from the ATO.  Deppro’s quantity surveyors are educated, accredited, and take pride in providing accurate reports.