Residential Property Investment 101

Before embarking on investment, we ought to possibly define residential housing. Residential housing encompasses any property where the main use is human habitation. This includes houses, apartments, flats, maisonettes and bungalows. These can all be included in your property portfolio as it expands, but at first you ought to decide to focus on a single type of property.

One of the most proven ways of making money from residential property investment is by flipping it. Property flipping is basically reselling the property fast instead of holding on to it as a long term investment or rental. The most common type of flipping that most people are possibly familiar with, is buying a property the needs some repair, fixing it up and then reselling it to a residential buyer. The challenge part comes in finding bargain properties and estimating the amount of work needed before the property is in any good shape for reselling. Obviously, you can as well sell the property in its existing condition to a buyer who’s willing to fix it up by themselves in exchange for a lower buying price. In such scenario, the challenge is in purchasing the property cheap enough that you can sell it for below market price and still earn profit.

But you do not really have to own a distressed house to earn profit from it. A lot of people in point of fact have made a splendid career of locating such good-deal properties and selling this information to investors for a fee. These people are referred to as bird dogs, and can make as much as $500-$100 for each property they locate for an investor. Most of the ‘bird dogs’ in the long run elevate and work for themselves once they’ve the money to purchase distressed properties.

Lately, though, the trend in flipping residential property is by making a short sale deal with a distressed investor, and in immediately reselling it to a buyer. You would actually be playing the role of a middleman between the buyer and the seller, and you earn your profit from the difference between the selling and the buying price.

3 Key Components to Maximizing Residential Property Investment Returns

Why is residential property such an excellent investment right now?

There are 3 key elements that continue to make residential property the ideal investment vehicle.

  1. Interest rates are still at historic lows
  2. Supply and demand aspects favor investors
  3. Residential is the most favored security by the banks

We can clearly see that these 3 components have apparent value, but picking the ultimate investment property is a process that entails knowing your purchasing budget and your property holding budget. Additionally, knowing what you expect to make out of a venture and the best time for the selection process. Finding the precise property that’ll enable you to attain your personal goals in the most efficient and cost-effective approach is the objective.

Residential investment properties come in a number of different types, for instance, single dwelling, dual occupancy, multi unit, serviced apartments, student accommodation, low rise, high rise, executive ,luxury, affordable, inner suburban, outer suburban. The choice of property is typically determined by price and personal circumstances. Knowing your right budget is the key to appropriately choosing your precise property.

Once you select the budget and property type, then you have to think about ownership, as you can considerably perk up your financial results by properly establishing the type of structure you acquire the property in. For instance factors like stamp duty, GST in the case of development, superannuation, that is, self managed funds utilizing installment warrant arrangements, negative gearing, land tax and deprecation taxation allowances, make sure the appropriate entity is established at the point of acquisition.

If you’re busy building a business, profession or career then seek advice from a property investment consultant. This will potentially open up ideas that you had not thought about, and if it does not then there is a fair chance you’re talking to the wrong person for you.