Here are six tips for becoming a savvy property investor…

1. Get a good rental return

The first aspect you should check is whether the gross rental return is greater than 5%. As the rule of thumb, a property selling for $500,000 should rent for at least $500 per week. If the property is selling for $600,000, it should rent for $600 per week.

As you’re probably borrowing money to finance your investment property, a higher rental return will make it easier to meet your loan repayments.

2.              Make sure it’s a long-term asset

As well as a healthy rental return, check to make sure it has capital growth.

Because of the high costs associated with buying an investment property (stamp duty, legal costs, mortgage costs, loan establishment fees, etc.) you probably want to hold onto your investment for at least 10 years. So make sure you get a building and pest inspection before purchasing the property so you don’t face any unexpected major capital costs in that time.

3.              Get the right people to rent your property

When it comes to making a return on your investment, getting the right tenants can make all the difference. And professionals are usually the best tenants you can get. Generally they have a secure job that pays well, pay their rent on time and look after the property.

4.              Choose a property in the right location

People who purchase property within 15km of the CBD tend to get very good returns for their investment, probably due to the lack of infrastructure. Tenants and homebuyers don’t want to travel an hour to their office, and so prefer properties closer to work.

5.              Look for a low-maintenance property

Look for an investment property that has a low maintenance cost. Properties that have lifts or swimming pools in the complex can be very expensive to maintain. And you definitely don’t want a property that needs painting every 8 years.

 6.              Choose a property in a small apartment block rather than a large complex

Properties in smaller apartment complexes aren’t mass-marketed to investors, and generally have a high percentage of owner-occupiers. And that’s good for your investment because they generally look after the property and grounds, particularly if they’re retirees.

We guide clients in pragmatic approaches to investing so they can make wise decisions and not be distracted by the gloss and glamour of property developers’ pitches and marketing materials. You work hard to save money for your investments, and there are plenty of investment spruikers focused on selling you their product, rather than ensuring the investment is a right fit for your strategy.

For independent advice or more information about choosing an investment property drop Peter Quinn a line by submitting an online enquiry or calling on +61 2 9580 9166 and book your obligation-free appointment.

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.  It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.

The post Avoiding the hype: 6 pragmatic tips for buying an investment property appeared first on Quinn Financial Planning.

Here are six points to consider when selecting your shares. You’ll notice the points spell I.S.A.D.I.V. (referring to “Is a dividend”) to make it easy for you to recall each one.

Use this checklist to avoid making investment decisions based on hype or fads presented by the media, or popular opinion. There are timeless principles to wise investment, and this checklist embodies the approach used by successful long-term investors.

1.     Industry

Look for businesses that are price makers, not price takers.

Resource companies are a classic example of price takers. If the price of a commodity falls in the United States overnight, you can bet the share price of the companies that mine that resource will fall in value tomorrow.

On the other hand, companies such as Woolworths and Coles are price makers. They put pressure on suppliers to reduce their price, which they can do because of their significant buying power.

2.     Size of the Company

The security of your capital is critical. Look for shares in companies that have a market capitalisation of more than $1 billion, which essentially covers the ASX200.

Smaller companies may grow faster than their larger competitors in a period of growth. But during  an economic downturn the share prices of these smaller companies tend to fall drastically.

3.     Assets

Review your target investment company’s balance sheet, which should be readily available on the Internet. Ideally the company will have tangible assets (cash, inventory, investments and term deposits) rather than intangible assets (trademarks, goodwill, patents, etc.).

4.     Debt

Debt isn’t always a bad thing. All companies have debt. It helps them purchase assets and grow.

What you should be wary of is the ratio of debt to the company’s assets. Look for companies where the level of debt is less than 50% of its total assets.

5.     Investment Return

This is the ratio of the company’s profit divided by its total assets, and you can calculate it by downloading the company’s annual report.

If the company’s profit is less than 8% of its total assets, you should think twice about investing in this company. The company directors’ main role is to grow the company, and the return on investment is a measure of their success.

6.     Valuation

There’s one more checkbox you company needs to tick—its fair market price. The company may have ticked all the other boxes, but it may be expensive when compared to its fair market value (i.e. overpriced).

The good news is various research materials are available to help you determine the company’s fair market value.

This checklist is an example of the pragmatic investment approach we teach our clients in guiding their investment decisions. If you’d like more information on selecting and buying shares get in touch with Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 and book an obligation-free appointment.

The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.

The post Your 6-Point Checklist When Buying Shares – I.S.A.D.I.V. appeared first on Quinn Financial Planning.

It’s Your Business – September 2012
The Do’s and Don’ts of SMSFs
Recent share market volatility has negatively affected many people’s superannuation savings – taking more control of your financial future may be just what the doctor ordered.  Peter Quinn sets out a 10 step guide to help you manage your own Self Managed Super Fund.

The Really Simple Self Managed Super Fund Guide – July 2012
Gear up for smooth sailing in your retirement
Although many people have a retirement plan, we’re often distracted by day-to-day responsibilities which push this plan down low on our priorities list.  Based on the Association of Superannuation Funds of Australia, you currently need $900,000 in investment assets to retire comfortably.  Peter Quinn provides some helpful tips to assist you with your super and retirement planning.

It’s Your Business – March 2012
Ensuring a Super Retirement
Superannuation, shares, property – what’s all the fuss about?  As a result of the past three years of share market volatility and economic uncertainty, many business owners are questioning whether investing in shares is the best strategy to plan for their retirement, or whether they should explore other options or reduce their super contributions, to avoid further losses.

Put your super to work for your business – and put your business to work for your super.  Peter Quinn gives some helpful advice.

My Business – February 2012
Make Retirement SUPER
Business owners cannot afford to ignore superannuation.  Financial advisors say hoping for a big payday when you decide to exit a business is a very poor retirement savings strategy, and that small business owners should instead invest in superannuation.

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