FREQUENTLY ASKED QUESTIONS
Q. What if interest rates rise?
A. We fully expect interest rates to rise. However, by fixing your interest rate, you are insulated from the rise. As interest rates, do rise, we should see an increase in rental income which in turn actually improves your financial position considerably.
Q. What if we can’t get a tenant?
A. As a property investor it would be unrealistic to expect your property to be perpetually let. We advise all clients that they should expect periods of vacancy. The Property Managers we work with average a 2% vacancy rate, which equates to approximately one week per year. By setting reasonable rental income expectations for high quality property, periods of vacancy longer than the average should be rare.
Q. What if inflation stays low?
A. Periods of high property growth are sometimes associated with high inflation. All our projections are based on a growth rate of 2% above inflation. Over the last 40 years this has proven to be conservative “Real Growth”. We have found that even in periods of low inflation, there have been pockets of property that have well and truly outperformed the averages and have exceeded the 2 % benchmark real growth. It must also be clear that even a real growth of 2% on a $450,000 property is $9,000 above inflation.
Q. What if the property doesn’t grow in value every year?
A. It is unreasonable to expect any property to grow in value each and every year. In fact, the growth may be quite flat for some years and then in periods of high economic growth, the property may experience 10% or 15% over 2-3 years. This is why we do not try to pick the “Property Cycle” but rather take the long-term view that over any 10 to 15 year term, property will average a solid real growth above inflation. It is important to be in the market well before any extreme growth. It is equally important to hold your property even when the market is dropping or flat.
Q. What if my tenant damages the property?
A. We strongly recommend Tenants & Landlords Insurance which covers damage to your property.
Q. What if the tenant does not pay the rent?
A. Tenants & Landlords Insurance covers loss of rent due to damage, non-payment of rent and the breaking of lease agreements.
Q. What if the Government changes the tax laws?
A. Successive Governments have made it very clear that they will not change the tax laws that affect negative gearing. They will cast a close eye over those investors who use this investment strategy, which is why our service is so crucial to property investors. We work with accountants and tax experts to ensure that your property has the highest LEGAL tax deductions.
The Australian Government cannot afford to meet the demand for rental accommodation with Govt housing. It fully realises that if it removes the attractiveness of investing in residential property, the building industry will suffer a major setback as it did in 1985 and it will have a housing shortage for the rental community that it will not have the funds to meet.
Q. What if I lose my Job?
A. This is an insurable event and should be discussed with your adviser.
Q. What if I don’t want to use a property manager?
A. It is your choice.
Q. Can I lose my house?
A. The chances of any bank selling your own home as a result of an investment property investment is extremely rare. With the insurances available and our Property Selection process, the risk is low.
Q. Who controls my investment?
A. You do.
Q. How much will it cost me?
A. In most cases, there will be no need for a cash deposit to secure the property and the actual cost to you on a weekly basis needs to be within your savings and budget targets.
How can we help you?
Contact us today to organise an initial appointment with an Investment Property Specialist.
The specialist can provide a free financial assessment and evaluate the impact on your individual circumstances.
We provide a holistic service and can assist you in all areas of your financial life.