The Most Effective Way of Building your Property Portfolio

Dec 15 2010 / 10:14 am Was written by Atwell & Co. Comments Off

The Most Effective Way of Building your Property Portfolio

Have you ever wondered how to build an effective property portfolio in Australia? Or maybe you have but until now you can’t think of the best reason why you want to do it. There has been an amazing yet risky technique which investors have been using to earn significant amount of money from real estate property.

Such technique is dependent on finding another lender for an existing mortgage in or simply referred to as re-mortgaging. Thus, it also involves haggling for reasonable discounts on properties that are out of plan taking a small amount of money then converting it tenfold in a short time frame.

How it Works

This amazing technique is only applicable in areas with competitive property market which present a lot of opportunities to buy off-plan properties. These areas should be offering more than 10% discount in order to be considered as an ideal ground for this technique.

So it all starts in buying more than one property that are yet to be constructed. Such properties are not yet ready for occupancy because they have not been constructed yet. These properties are referred to as off plan properties. Usually, these are the properties that have just acquired permission for planning. It has been a trend to see developers giving more discounts to investors who are ready to purchase off plan properties.

When the construction is over, refinancing takes place. With the appreciating real estate properties combined with the discounts obtained when the properties were bought, investors are rest assured that they earn more profit once refinancing is initiated. Such profit will be allotted to another property.

This process is a repetitive cycle that ensures investors have established a mighty portfolio in Australia within the property business.

Generating Income from Property

One of the fundamentals in property investment is generating profit from property. How exactly do you earn from it? This has presented a challenge particularly in taxation. You will find various perspectives and these all are summed up in 3 ways.

  • Direct Cash flow. This first concept is quite simple to understand; you have to pay tax on your earnings. Preventing income tax is only possible once we learn how to leverage our profit with our property.

 

  • Property Selling. When you sell your property, you are sure to get more profit in return. You will be able to calculate your earning by subtracting the total selling price from your total investment then add the tax imposed to it.

 

  • Re-mortgaging Your Property. This has been considered as the best way to prevent tax burdens since you will be able to take advantage of using the capital. Because the funds you are using are from refinancing which is considered as debt, your property will not be liable for taxation.

Atwell & Co Real Estate
Unit 6 / 29-30 Grattan Street Prahran, Victoria 3181
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