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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Your step-by-step guide to building long-term wealth through property This fully revised Australian edition of Property Investing For Dummies cuts through the jargon and hype to identify what's really needed to succeed in Australia's hot property market. It lays out, in clear and helpful terms, exactly how you can identify the right investment options, figure out your finances and make a successful bid or offer. You'll master the basics on how to manage risk, protect your new property and become an effective landlord or landlady. And you'll learn how to grow a profitable portfolio that can generate income and secure your financial freedom. * Create a property investment plan that fits with your personal financial goals * Evaluate properties and locations to identify value and find the best deals * Understand your finance options, including mortgage terms, interest rates, lending fees and using an SMSF * Assemble a reliable support network of finance and property experts * Build a solid property portfolio, with practical advice on how to grow equity and diversify your investments This easy-to-follow but comprehensive book is perfect for anyone looking to buy property in today's competitive market. From buying your first home to taking advantage of strategies like flipping, developing, and rentvesting, Property Investing For Dummies shares all the latest info you need to invest wisely.
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Veröffentlichungsjahr: 2023
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Property Investing For Dummies®, 3rd Australian Edition
Published by
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www.dummies.com
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ISBN: 978-1-394-17048-7
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Property Investing For Dummies®
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Table of Contents
Cover
Title Page
Copyright
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Where to Go from Here
Part 1: Understanding Real Estate as an Investment
Chapter 1: Comparing Real Estate to Other Investments
Finding Your Motivation
Stacking Up Real Estate Against Other Investments
Determining Whether Investing in Real Estate Is for You
Fitting Real Estate into Your Financial Plans
Being Mindful of Performance Statistics
Chapter 2: Covering the Landscape of Common Real Estate Investments
Investing in Residential Properties
Using Your Home as a Base for Investing
Considering Commercial Real Estate
Uncovering Undeveloped Land
Considering Rentvesting
Chapter 3: Opportunities in Real Estate
Buying Property Strategies
Flipping Out over Buying and Flipping
Property Development
Chapter 4: Building Your Team
Establishing Your Team Early
Getting Good Legal Advice
Lining Up a Lender or Mortgage Broker
Adding an Accountant
Inspecting with a Building Expert
Working with Real Estate Professionals to Buy and Sell Property
Dealing with Property Managers
Keeping Relationships Professional
Part 2: Financing: Raising Capital and Sourcing Loans
Chapter 5: Sources of Finance
Calculating the Costs of Entry
Rounding Up the Required Cash
Primary Sources of Finance: Lenders Big and Small
Borrowing Against Property Equity
No Home? No Worries!
Advanced Funding Strategies
Chapter 6: Financing Your Property Purchases
Taking a Look at Mortgages
Making Some Decisions
Reviewing Other Common Lending Fees
Mortgages That Should Make You Think Twice
Vendor’s Terms
Chapter 7: Shopping for and Securing the Best Mortgage Terms
Shopping for Mortgages
Working with Economies of Scale
Sizing Up Banking Products
Considering a Professional Package
Avoiding Some Big Hidden Nasties
Attributing Rental Income
Solving Loan Predicaments
Chapter 8: Property in Self-Managed Super Funds
Superannuation’s Great Tax Advantages
Comparing SMSFs with Other Super Funds
Owning Your Business Premises Inside Your SMSF
Borrowing to Invest in Property in SMSFs
Understanding Your Legal Requirements
Working Out Who Can Lend to SMSFs
Delving into Specific Tax Implications
A Warning on SMSFs: It’s Complicated!
Chapter 9: The Ongoing Costs of Real Estate
Budgeting for the Inevitable
Ongoing Property Taxes
Other Costs to Be Aware Of
Part 3: Finding and Evaluating Properties
Chapter 10: Location, Location, Value
Deciding Where to Invest
Evaluating a Region: The Big Picture
Investigating Your Intended Real Estate Market
On the Block: Metropolitan Properties
Seek and You Shall Find: The Sea, Ski or Tree Change
Comparing Communities Come Investment Time
Mastering Sellers’ Markets and Buyers’ Markets
Understanding Value
Chapter 11: Preparing to Bid or Make an Offer
Valuation: Working Out How Much to Pay
Negotiating Basics
Making Your Offer
Determining How to Hold Title
Chapter 12: Signing the Contract, Inspecting the Property and Settling
Offer Accepted!
Conducting Formal Due Diligence
Using the Settlement Period Wisely
Part 4: Operating the Property
Chapter 13: Property Management 101
Managing Yourself or Hiring Experts?
Renting Vacant Properties
Signing Leases and Collecting Money
Working with Existing Tenants
Avoiding Discrimination Complaints
Chapter 14: Protecting Your Investment: Insurance and Risk Management
Developing a Risk-Management Plan
Getting the Property Insurance You Need
Insuring Your Biggest Asset: You
Chapter 15: Tax Considerations and Exit Strategies
Understanding the Tax Angles
The Biggest Expense of All — Interest
Gearing Strategies and Tax
Capital Gains Tax
Turning Your Home into an Investment Property
Exit Strategies
Chapter 16: Building a Portfolio
Using Property’s Power Tools
Buying Your Second Investment Property
Buying the Third, Fourth, Fifth and Beyond
Growing Equity
Understanding Good Debt versus Bad Debt
Diversifying Your Portfolio
Part 5: The Part of Tens
Chapter 17: Ten Ways to Increase a Property’s Return
Raising Rents
Reducing Turnover
Subdividing and Developing
Keeping Your Bank on Its Toes
Maintaining and Renovating
Cutting Back on Operating Expenses
Taking Advantage of Tax Benefits
Being Prepared to Move On
Adding Value through Change in Use
Improving Management
Chapter 18: Ten Steps to a Real Estate Fortune (Or a Great Second Income)
Building a Portfolio through the Power of Compounding
Moving Debt from ‘Bad’ to ‘Good’
Valuing Your Time
Building Up Savings and Cleaning Up Credit
Renting Out Your Holiday Home
Buying Property in the Path of Progress
Buying the Right Property at the Best Price Possible
Renovating Property Right
Keeping Abreast of Market Rents
Increasing Income and Value through Superior Management
Index
About the Authors
Connect with Dummies
End User License Agreement
List of Tables
Chapter 1
TABLE 1-1 How a Rental Property’s Income and Wealth Build over Time
Chapter 8
TABLE 8-1 Australia’s Marginal Tax Rates (FY 2022–23)
Chapter 11
TABLE 11-1 Market Data Summary
TABLE 11-2 Adjusting Sales Price to Determine Value
Chapter 12
TABLE 12-1 Typical Allocation of Expenses
Chapter 15
TABLE 15-1 Calculating Net Taxable Income
TABLE 15-2 Calculating Net Sales Proceeds
TABLE 15-3 Calculating Adjusted-Cost Basis
TABLE 15-4 Calculating Total Gain or Loss on Sale
TABLE 15-5 Calculating Reportable Capital Gains
TABLE 15-6 Calculating Total Tax Liability
List of Illustrations
Chapter 10
FIGURE 10-1: Property knowledge sheet.
Guide
Cover
Title Page
Copyright
Table of Contents
Begin Reading
Index
About the Author
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Introduction
Welcome to Property Investing For Dummies, 3rd Australian Edition! We’re delighted to be your tour guides. Throughout this book, we emphasise three fundamental cornerstones that we believe to be true:
Property is one of the three time-tested ways for people of varied economic means to build wealth (the others are shares and small business). Over the long term, you should be able to make an annual total return of around 7 to 9 per cent per year investing in real estate.
Investing in real estate isn’t rocket science but does require doing your homework. If you’re sloppy with your legwork, you’re more likely to end up with inferior properties or to overpay for a property. Our book clearly explains how to buy the best properties at a fair (even below-market) price. (Although we cover all types of properties, our book concentrates on residential investment opportunities, which are more accessible and appropriate for non-experts.)
Although you should make money over the long term investing in good real estate properties, you can lose money, especially in the short term. Don’t unrealistically expect real estate values to increase every year. When you invest in real estate for the long term, which is what we advocate and practise ourselves, the occasional price declines should be merely bumps on an otherwise fruitful journey.
About This Book
To say that much has changed since the 2nd edition was published would be an understatement of significant proportions. Back then, the lingering effects of the global financial crisis (GFC) permeated property and financial markets both in Australia and overseas. Fast-forward to late 2022, and the world is re-emerging from the COVID-19 pandemic — a health (and economic) emergency that no-one could have predicted all those years ago.
Since the last edition, we have seen property values rise and fall in various markets around the nation, including one almighty boom in 2021, when record low interest rates as well as bumper buyer demand pushed property prices to eye-watering levels around the nation. Those heady days are thankfully behind us at the time of writing, but ahead lies increasing interest rates as well as a generational undersupply of rental properties in most markets.
The property investment profession has also evolved over the past decade, with a higher calibre of people generally working in the sector — however, investors still need to be mindful of spruikers who, alas, are as present as ever.
The property investment sector is one that is festooned with ever-changing rules and regulations, as well as monetary policy, so it is nigh-on-impossible to update a book as detailed as this one without some recognition that prices and policies may well be different even by the time it hits the shelves. That said, this updated edition is one that reflects the market as it was in 2022, which was one of moderating market conditions.
One thing that has not changed over the years is the potential financial and lifestyle benefits for anyone who wants to consider using property investment as a wealth creation vehicle.
History continues to show us that real estate is one of the most low-risk investments you can make — as long as you educate yourself on the pros and the cons, and tap into expert advice when needed to assist you along the way. A great place to begin your education is reading this book — and re-reading it, too — to ensure that you are as informed as possible before you set out on your very own property investment journey.
If you expect us (in property spruiker fashion) to tell you how to become an overnight multi-millionaire, this is definitely not the book for you. And please allow us to save you money, disappointment and heartache by telling you that such shysters are only enriching themselves through their grossly overpriced seminars or online courses, or are likely urging you into their property developments with funding from their related-party loans.
Property Investing For Dummies, 3rd Australian Edition, covers tried and proven real estate investing strategies that real people, just like you, use to build wealth. Specifically, this book explains how to invest in houses, units, apartments, small apartment blocks, commercial properties (including office, industrial and retail) and raw (undeveloped) land.
Unlike so many property investment book authors, we don’t have an alternative agenda in writing this book. Some real estate investing books are little more than promotional materials for high-priced seminars or developments the author is selling. The objective of our book is to give you the best crash course in property investing, so that, if you choose to make investments in properties, you may do so wisely and confidently.
Foolish Assumptions
Whenever authors sit down to write books, they have particular audiences in mind. Because of this, they must make some assumptions about who the reader is and what that reader is looking for. Here are a few assumptions we’ve made about you:
You’re looking for a way to invest in real estate but don’t know what types of properties and strategies are best. (We’ll show you.)
You’re considering buying an investment property, be it a house, a unit, an apartment or flat, a small apartment or unit complex or an office building, but your real estate experience is largely limited to renting an apartment or owning your own home.
You may have a small amount of money already invested in real estate, but you’re ready to go after more or bigger properties.
You’re looking for a way to diversify your investment portfolio.
If any of these descriptions hits home for you, you’ve come to the right place.
Icons Used in This Book
Throughout this book, you can find friendly and useful icons to enhance your reading pleasure and to note specific types of information. Here’s what each icon means:
This icon flags concepts and facts that we want to ensure you remember as you make your real estate investments.
Included with this icon are complex examples and interesting technical stuff that you may want to read to become even more familiar with the topic.
This icon points out something that can save you time, headaches, money or all of the above!
Here we’re trying to direct you away from blunders and errors that others have made when investing in property. We’re also alerting you to those who may have conflicts of interest or offer biased advice, as well as other concerns that could really cost you big bucks.
Where to Go from Here
If you have the time and desire, we encourage you to read this book in its entirety. It provides you with a detailed picture of how to maximise your returns while minimising your risks in the property market. But you may also choose to read selected portions. That’s one of the great things (among many) about For Dummies books. You can readily pick and choose the information you read based on your individual needs.
Part 1
Understanding Real Estate as an Investment
IN THIS PART . . .
Compare real estate investing with alternatives you may consider and understand how to fit real estate into your overall wealth creation plans.
Uncover the different types of properties you can buy and the different methods of buying them, and consider other property strategies — such as buying and flipping, and property development.
Find out how to assemble a team of competent property investment professionals to help ensure your long-term property investment dreams can be realised.
Chapter 2
Covering the Landscape of Common Real Estate Investments
IN THIS CHAPTER
Looking at residential properties
Broadening your investments away from home
Getting to know commercial real estate
Examining undeveloped land
Comprehending rentvesting
If you lack substantial experience investing in real estate, you should avoid more esoteric and complicated properties and strategies. In this chapter, we discuss the more accessible and easy-to-master property options, from residential to commercial properties and vacant land. In addition to discussing the pros and cons of each, we provide insights as to which may be the most appropriate and profitable for you.
Investing in Residential Properties
Residential property can be an attractive real estate investment for many people. Residential housing is easier to understand, purchase and manage than most other types of property, such as office, industrial and retail property. If you’re a homeowner, you already have some level of experience locating, purchasing and maintaining residential property.
If you’ve been in the market for a home yourself, you know that, in addition to freestanding (detached) houses, you can choose from numerous types of attached or multi-dwelling properties, including units, apartments and townhouses. In the following sections, we provide an overview of why some of these may make an attractive investment for you.
Freestanding houses
As an investment, freestanding houses have usually performed better in the long run than attached housing, units or apartments. In a sound real estate market, most housing appreciates, but traditional detached homes tend to outperform other housing types for the following reasons:
Freestanding houses tend to attract more potential buyers — most people, when they can afford it, prefer detached dwellings, particularly for the increased privacy (and space).
Attached housing, or units and townhouses, is less expensive and easier to build — and to overbuild. Because of this potential for surplus properties on the market, such property tends to appreciate more moderately in price.
Land value is the major driver of property prices. The higher the land content, the more likely the capital growth. And a freestanding house, in most cases, has a higher proportion of land content than attached housing.
Because freestanding houses are the first choice for most Australians, market prices for such dwellings can sometimes become inflated beyond what’s justified by the rental income that they can produce. Detached houses are likely to produce lower rental yields (rent as a proportion of current value, for the purpose of market comparison) than most other options, partly because of the higher purchase prices of houses versus units.
With a house, you (in conjunction with your property manager) are responsible for maintenance and repairs. If you engage one (as we recommend), your property manager will find the tradespeople and coordinate and oversee the work, while the fees for such work will come out of your returns. Also recognise that, if you purchase a house with many fine features and amenities, tenants living in your property won’t necessarily treat it with the same tender loving care that you might.
A primary rule of being a successful landlord is to let go of any emotional attachment to a property. But that sort of attachment on the tenant’s part is favourable: The more tenants make your rental property their ‘home’, the more likely they are to return it to you in good condition — except for the expected normal wear and tear of day-to-day living. (We discuss the proper screening and selection of tenants in Chapter 13.)
Attached housing
As the cost of land around major cities has skyrocketed, packing more multi-dwelling units into a given plot of land keeps housing somewhat more affordable. Here, we discuss the investment merits of units, apartments and townhouses.
Apartments and units
When you purchase a flat or apartment, you’re actually purchasing the airspace and interior surfaces of a specific apartment as well as a proportionate interest in the common areas — the pool, tennis court, grounds, hallways, roof-top gardens and so on. Although you (or your tenants) have full use and enjoyment of the common areas, remember that the body corporate or owners corporation (the collective owners of all apartments in the block) actually owns and maintains the common areas, as well as the building structures themselves, which typically include the foundations, outside walls and doors, roof, and the plumbing, electrical and other building systems. Before purchasing an apartment, you should review the body corporate governing documents to check what’s considered common areas, and take into account annual body corporate fees (see Chapter 9 for more on ongoing fees).
A unit, on the other hand, can be an attached or detached dwelling on a block of land, with shared common ground (such as driveways and gardens). For example, two, three or more dwellings that have been built on a single block of land.
One advantage that apartments and units have over other investment property options is that apartments tend to produce higher yields because of the lower purchase price points. Most bodies corporate deal with issues such as roofing and gardening for the entire building and receive bulk-buying benefits. Note: You’re still responsible for maintenance that’s needed inside your unit, such as servicing appliances and interior painting (for more on ongoing maintenance, see Chapter 9).
Although apartments may be somewhat easier to maintain, they tend to appreciate slower than houses and even units, unless they’re located in a desirable urban area. This is in part because most apartment blocks lack the scarcity value of houses.
Townhouses
Essentially attached homes, townhouses are a hybrid between ‘air space only’ apartments and houses. Like apartments and units, townhouses are usually attached, typically sharing walls and a continuous roof. But townhouses are often two- or even three-storey buildings that can come with a courtyard or balcony and offer more privacy than an apartment. That generally means you don’t have someone living above or below you.
As with apartments, it’s extremely important that you review the body corporate governing documents before you purchase a townhouse to see exactly what you legally own. Townhouses are usually organised so that no limitations are stipulated on the transferability of ownership of the individual lot that encompasses each dwelling and often a small area of immediately adjacent land or air space for a patio or balcony. Courtyards are often exclusive-use common property, because, although the owner has sole use of the area, the body corporate still owns it. The common areas are all part of a larger single lot, and each owner is a shareholder, in equal proportion, of the common area.
Apartment blocks
Apartment blocks tend to produce positive cash flow (rental income less expenses) in earlier stages of ownership. But, as with a house, the buck stops with you for maintenance of an entire apartment building. You can hire a property manager to assist you, but you’ll still have oversight responsibilities (and additional expenses) in that event.
