“As a property investment educator and investor I have been delighted with the services Erika of Aurora Finance Group has provided me and my clients. She takes the time to find the best options no matter what the circumstances. She is detailed and professional every step of the way and finds out exactly what a person wants and needs with their finance, coming up with most suitable solutions. Having worked with Erika over five years I trust her with my own finances.” Georga

What loans are best suited for investment?

No matter what asset you’re purchasing, having clear goals and objectives is critical to your long term success. It’s important to do your homework and to be prepared so that you can take up an opportunity when it presents itself.

Starting with property

Many people start on their path to financial freedom by building a property investment portfolio. Having the most suitable finance in place is the first step to success. And, Aurora Finance Group can help you find an investment loan that best suits your needs. Important things to consider:

  • Set your goals: be clear about the type of property portfolio you want to build and why.
  • Do your research: thoroughly research the areas you’re interested in and take the time to go to auctions in that area .
  • Get a suitable loan: your investment loan should be structured to minimise risk and maximise your return. Aurora Finance Group will help you find a competitive investment loan.
  • Structure the loan to maximise cashflow: investors want to maximise their cashflow so that they can continue to build their property portfolio. Having the correct structure will facilitate your cashflow.
  • Understand the basic tax issues:
    • Expenses: expenses are what you can legitimately claim, and include items such as loan repayments, insurance, rates, property management fees, costs of maintenance and repair.
    • Depreciation: this is the key to effective property investment, it’s the ability to depreciate certain items over time. Obtaining a depreciation schedule from a qualified professional, a quantity surveyor, may save you many hundreds of dollars.
    • Negative Gearing: gearing is another name for borrowing. If the interest on your loan and other outgoings are more than the rent you’re getting, then you have negative cashflow, the property is said to be negatively geared. You have a net loss that may be able to be offset against other income such as your salary.
    • Purchasing entity: Investors should consider in which entity to purchase and hold the investment. This may be in their own name, the name of their spouse, joint names, a company and/or trust structure. It’s important to discuss such matters with your accountant, financial planner and/or lawyer prior to any purchase as it may be costly to change the structure after the property is purchased.

Once you have a thorough understanding of these areas you’ll be in a great position to make a profitable property investment.

Tax, cashflow and return on investment

The right kind of investment loan needs to take your goals into account. There are many variables that can get you caught out at tax time if you don’t have a solid strategy and if you haven’t structured you loan properly. Negative gearing (where your loan repayments, fees and other costs exceed your rental income) will reduce the amount of tax you have to pay. While positive gearing (where the annual rental income received from the property is higher than the annual loan repayments and costs) may bring you more income but this income will attract tax.

It is wise to look at property investment as a long term proposition. This may mean you sacrifice short term cashflow, but the payoff can be a rich and substantial return on investment further down the track.

Build a financial advice team to support your investment

Consider using a buyer’s agent. They have their finger on the pulse of the property market and will be able to advise what properties are best suited for investment in your circumstances.

Your accountant will be the best source for all tax advice.

Your financial planner will make sure your property investment goals are included in your overall financial goals (both short and long term).

And Aurora Finance will ensure you choose the most suitable kind of investment loan for you needs, whether it’s a Line of Credit (LOC) a Basic Loan or a Standard Variable Loan.