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Dec
13
Safe High Return Investments Naples
I recently decided the time was right to utilize some surplus cash I had available and began looking to purchase an investment property. Whilst it would have been easy to just dive in and find something that I could afford regardless of the location or potential growth, I thought it best to do some research knowing that my investment property was more than likely going to be a long term property investment for me. Timing was also good from an income perspective âI good easily demonstrate my capacity to service the investment loan I would need to complete the purchase and negatively gear the property. The âcostâ of my investment loan after tax benefits were taken into account was considerably reduced. When I began to think carefully about purchasing my investment property, I took such things as what economists were predicting as far as growth and property value increases as well as expenses that I would incur, both now and ongoing. This was definitely a decision I had to make with my head and not my heart. I also considered what was happening in the investment loan scene particularly in relation to features of an investment loan that could be advantageous for me as well as the general interest rate environment. On the property front, my first port of call was to view the recent BIS Shrapnel report noting that by mid-2011, the median Sydney house price will climb from $560,000 to $650,000 – A senior economist at the firm, Jason Anderson, said the price rise would be spread across the city, helping cut the gap between Sydney’s two-speed property market. This was quite encouraging and meant that I could now look at a vast array of locations for my investment property. Whilst deciding on a local property, I also looked at the opportunity to perhaps purchase an investment property interstate, which is definitely something prospective buyers should focus on. As far as investment loan product was concerned I checked out a number of mortgages until I found one that included a capitalizing interest component. I wanted to make sure that in the event that I had surplus personal income I could apply as much as possible of this to my home loan repayment as opposed to subsidizing my investment loan repayments. A capitalizing feature in an investment loan also gives me some protection in case of unexpected maintenance costs on my investment or a prolonged vacancy. The next important issue I had to consider when deciding on an investment property was the cost associated with the purchase. There were the up-front costs such as loan fees, legal fees and government charges as well as the ongoing costs such as maintenance costs, real estate agentâs fees (rent collection), loan repayments, government taxes, etc. From a discussion I then had with my accountant, I discovered that as this was to be an investment property, most of the costs associated with the purchase, both up-front and ongoing, were tax deductible, either in the year I incurred them or in some cases they had to be spread out or amortized over a 3 or 5 year term. I also checked out the possibility of borrowing these costs within my investment loan. This is always a possibility but I discovered that if your investment loan exceeds 80% of the purchase price then the costs increase â basically it did not seem worthwhile to take my investment loan past 80%. I did realize however that if I included my home property as security for the investment loan (I had quite good equity in my home) then this meant that I could borrow 100% + costs on the purchase within the investment loan. This again meant that instead of applying my savings to the investment purchase (and taking a smaller investment loan) I applied this to the reduction of my non-deductible home loan debt and increased my investment loan debt. Increasing the investment loan like this was much more tax efficient for me. Having done my own property research and having sourced an excellent investment loan I now felt at ease with my decision to go ahead and start to look in earnest for a property. I am now the proud owner of an affordable investment property that I negatively gear for taxation purposes through my investment loan. With the help of a reputable non-bank home loan provider, I have structured my home and investment loans to maximize my tax benefits. When thinking about purchasing an investment property and looking for an investment loan it would always be advisable to thoroughly research the current real estate market, source qualified information about where the market is heading both locally and interstate as sometimes this may be a more profitable option and finally, speak to qualified financial consultants as this could potentially save you thousands when claiming deductible expenses. And donât forget to make sure your home and investment loan are structured properly so that you are minimizing your tax bill as much as possible.
High Return Investments Naples
Nov
20
How Does Guaranteed Investment Certificate (GIC) Work in Canada?
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A Guaranteed Investment Certificate, or GIC is a type of Canadian investment in which the rate of return is guaranteed over a fixed period of time. Guaranteed Investment Certificates are relatively low-risk investments, and thus yield smaller returns than that of stocks, bonds and mutual funds. GIC’s are typically offered by banks or trust companies. These safe and secure Canadian investments earn interest at a fixed rate, variable rate, or based on a market-based index. Many Canadians view Guaranteed Investment Certificates an excellent choice for an investment portfolio that requires a measure of safety.
How do Guaranteed Investment Certificates Work?
With GIC’s, you will invest an amount of money (determined by you) for a period of time that is determined by the specific type of Guaranteed Investment Certificate that you choose. Typically these periods of time vary greatly and can tend to range anywhere from 1 day to 10 years. GIC’s with longer terms will earn more interest than short term ones. When your Guaranteed Investment Certificate reaches the end of its term (otherwise known as ‘maturity,’) you will be able to access not only your initial investment, but the earned interest as well.
Some Canadian Guaranteed Investment Certificates require that the amount of money you invest initially remain ‘locked in’ for a minimum period of time (30 days for example). Other GIC’s will allow you to access your money before the investment matures. There are even Guaranteed Investment Certificates that allow you to add to your initial investment amount by making weekly, biweekly or monthly contributions.
Redeemable vs. Non-redeemable
Guaranteed Investment Certificates can be redeemable or non-redeemable. As aforementioned, there are some GIC’s which allow you to access your cash during the term. This is referred to as ‘redeemable.’ With a redeemable investment, you will be able to withdraw your cash before maturity. Some redeemable GIC’s specify that you will earn less interest if you cash out prior to maturity.
Non-redeemable Guaranteed Investment Certificates do not allow withdrawals before the maturity date. Non-redeemable GIC’s may offer higher interest rates than redeemable ones.
Interest
Guaranteed Investment Certificates in Canada can be offer either fixed or variable interest rates.
Fixed Rate GIC’s
With a fixed rate GIC, your investment will earn interest at a set rate. That is, the interest that your investment earns will be consistent throughout the term of the investment. The benefit of fixed rate GIC’s is that you can predict exactly how much your investment will be worth on the maturity date.
Variable Rate GIC’s
Variable rate Guaranteed Investment Certificates are either linked to the Canadian prime interest rate or to stock-market performance. With interest-rate linked GIC, you are guaranteed that your money will grow, but you will not know at which rate until maturity. With market-linked GIC’s, you can earn more interest if the stock market does well, but your initial investment will be protected either way.
Benefits of GIC’s
The most important benefit offered by this type of investment is safety and security. Your initial investment will be protected. With fixed-rate GIC’s you can also enjoy guaranteed growth and an easy way to project value at maturity. GIC’s are also known to offer excellent interest rates. Finally, GIC’s are typically pretty flexible investments. You can enjoy flexibility in length of term as well as how often you receive payments.
If you live in Canada and are interested in investing your money in a safe instrument, a Guaranteed Investment Certificate may be right for you. To find out more about what is available in your area, visit your local bank.
Whether you are looking for a mortgage refinance, fixed, variable, open or closed mortgage loan, our financial Coaches can help you figure out which one is just right for you. We offer the most convenient GIC rates on the market.
High Return Investments Naples
Nov
07
Investing in Property and Looking for an Investment Loan
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Why invest and why take out an investment loan? People’s needs for investment are as varied as the investment vehicles themselves. Some want to own their home outright, pay the kids’ university fees, or take world trips; while others want to start their own business or retire on a comfortable income. The reality for most of us is that we won’t be able to afford these things on our salary alone (unless you’re fortunate enough to be the CEO of a major corporation). The key to successful investment is to leverage, that is, to use an investment loan to improve your capacity and increase your return. Why invest in property? Investing in property is the safest way to invest, but we also believe in a diversified portfolio to minimise risk. Similarly, Australians have trusted investment property as their favoured investment vehicle for generations – and with good reason. We recognise the cycles, the incredible advantage that appropriate leverage (making capital gains from borrowed funds) offers, the benefits of rent return and taxation relief in servicing those borrowings, and the significant growth achievable over time. It is not unusual for ordinary investors to accumulate four or more properties over 10 years – and the financial flexibility and cash flow outcomes can be exceptional, giving you piece of mind. Property allows you to leverage. With only $20 000 cash invested (plus around $10 000 upfront costs) it is possible to invest in a $200,000 property, making your earning potential greater. Can you afford to invest in property? The question should really be, “can you afford NOT to invest”, whether it be in investment property or some other form of investment? While everyone should be investing to give them more options in life, property investment may not be suited to everyone. Most people on a standard wage can service an investment loan. After all, the investment loan interest is first met by any rental income you generate. As a general rule there will only be a small shortfall on the interest on your investment loan. Traditionally the investment loan shortfall, as well as other costs relating to your investment property would be met by your personal income. Many investors however include a capitalising line of credit in their investment loan package so that they can draw on this to meet any shortfall costs as opposed to paying same from their personal income. Instead, they use as much of their personal income as possible, not to pay any shortfall interest on the investment loan but to make additional repayments to their home loan. This way their home loan is paid off much more quickly. With your investment loan you should also remember that negative gearing does deliver some relief to servicing your investment loan on the way through. While most investors will wait until the end of the financial year to claim their tax deductible shortfall you can in effect claim the investment loan shortfall on a monthly basis. Check out the ATO website on deductibility of interest on investment loans. What history can tell you about property History shows us that all property whether it be investment or owner occupied doubles in value every 7 to 12 years. Each property market is cyclic, that is, it goes through times of fast growth followed by little or no growth. When one market eg Sydney is in strong growth, other markets eg Brisbane will be in a little or no growth phase. The markets are referred to as being counter cyclic – when one is doing well, another is doing not so well. This means for example that when the Sydney’s growth slows, Melbourne’s picks up followed by Brisbane. This is the reason we emphasise the importance of investment property as a mid to long term investment. The key however is to identify the markets with the highest probability of short to medium growth and lowest probability of downside risk. This enables you to build equity faster and therefore add to your investment property portfolio. It also means that there are always new opportunities for investment property as there are always markets somewhere which are experiencing their growth phase. Choosing investment properties in growth markets assists in developing well-balanced, diversified portfolios. Property in the futureIn the past all property was good investment property, and a lot of people did very well out of it. While those days are gone, there are still exceptional opportunities for investors who understand the current market influences such how our population is changing, how family size is changing, how types of employment are changing, and how the economy is changing and what influences it. So why wait? Research property – buy with your head not your heart – be an informed purchaser and most importantly make sure your investment loan is also working for you.
Austral Mortgage offers competitive rates for investment loan and debt consolidation
High Return Investments Naples
Nov
06
Direct Investment in Property in Australia Through a Good Investment Loan
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An investment property is becoming a more popular choice for those seeking to create a revenue stream and also achieve capital growth through the investment property value increasing over time. This can also be part of a strategic financial plan and should be considered by investors as part of a diversified portfolio. When considering an investment purchase you should also source the best investment loan structure for you. With any investment your investment loan can make a difference to your return. If you are negatively geared through an investment loan the cost to you of that investment loan can effectively be reduced. If you purchase wisely, once there has been capital growth in the investment property over time there is the option of using this built up equity to move into another investment property, take out another investment loan and thereby continue to further increase your investment portfolio. Aside from the traditional belief that tax advantages are the key driver for taking out an investment home loan there are many other factors to consider when purchasing an investment property. Below are some key points for your reference, by using these points as a guide in conjunction with a detailed discussion with your accountant or financial planner you will be in a better position to ensure your investment purchase and investment loan is a financially sound decision for the long term. In relation to property enquiry therefore, you should consider: * What is the infrastructure like in the area? Are there enough schools, hospitals, shopping centres, doctors and dentists, freeways or main roads? * What has the historical capital growth been in the area over the last two decades? * Is the local council planning to increase housing density or add a new road to increase traffic flow? * If you are purchasing in a new subdivision, are there more new land blocks and house and land packages planned nearby. New developments can impact on the value of your home as purchasers often prefer a new home to one that might be 2 or 3 years old in the same area. * What length of time will the investment be held? And will this tie in with planned infrastructure development which will in turn accelerate capital growth? There has been recent press to suggest that investment and home property values in Sydney have a potential capital growth of 18% over the next 3 years so buying off the plan as an investor may be an attractive option in the current market. If you find a good property development, suitable for investment, which has a completion date in say 2010 – 2011 then you can exchange contracts with either a 10% cash deposit or a deposit bond (as a guide the cost of a deposit bond of around $86500 for say settlement September 2011 will cost you approximately $9000- $9500 (significantly less than the interest you would pay over the period if you borrow $86,500 at current interest rates of 9% p.a). The general feeling is that direct investment into property as opposed to into managed property funds is a better way to go – you are in control of your investment and avoid the high management fees so often charged by share and property investment funds. Do some research on the internet to see which areas have the greatest potential for capital gains – remember if you are looking for an investment property you should invest with your head not your heart. An investment property needs to be well located to transport and other facilities so that those renting can easily access these services. When considering which investment loan would suit you best take the following into account: 1. Does the investment loan allow you to split it into a number of investment loan accounts. This is a good feature to have in an investment loan because you are positioning yourself for the future – if you use the investment property at a later date to gear into another investment purchase then you can split the account so that the investment loan portion relating to the new purchase is clearly identified. This allows you, and your accountant, to easily track the costs associated with the new purchase. 2. If you use your home property (with an existing home loan) as security for the investment loan then it is imperative that you do not mix any home loan debt with your investment loan borrowings. The ATO in Australia requires you to apportion any additional repayments to a loan where the borrowings are “mixed”. You want to apply any additional repayments to your home loan before your investment loan. You are paying your home loan off in after tax dollars – whereas you can deduct the interest you are paying on your investment loan against the income form the investment property. 3. Does the investment loan allow you to capitalise interest? It is always a good idea to include a capitalising feature as a part of your investment loan to protect you against any unexpected costs in relation to the property. It also means that instead of subsidising the investment costs and interest shortfall on your investment loan you can capitalise these and make additional repayments to your non-deductible home loan debt. 4. If you have sufficient equity in your home then you may be better to consider a 100% + costs investment loan for the investment acquisition and use any savings you intended for the investment purchase to pay down your home loan debt. If you consider all these points your investment loan will be working in your favour at all times.
Austral Mortgage offers competitive rates for investment loan and debt consolidation
High Return Investments Naples
Nov
02
How to Know if a Real Estate Investment is Worth Investing?
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Kicking off the evaluation process is the toughest for us. Question after question kept popping up “Is the property market low enough?”, “Is this property worth considering?”, “Are the numbers the only criteria for investment?” What are we really looking for in real estate investing?? Quick bucks $$ or Regular income…Bottom-line = Money!!!Property Agents have tons of recommendations for YOU! How will you know whether they are good investment for you?There are many factors that need to be considered in evaluating a real estate investment. For example, location, environment/neighborhood, facilities, financing options, rental income, etc. If all above works, it is time calling your agents and set up appointments. Happy Viewings!!!!Actually it is not difficult and it does not need much of your time to know if a real estate investment is worth investing in the first place. All you need is crunching some numbers with your calculator, and Bingo! You can decide whether the property is worth investing.Later in this article, we will show you how these numbers work in your prospective real estate investment by two real life cases in Johor Bahru, Malaysia.Numbering GAMENumbers, numbers and numbers.. How do you get them?You may try calling a few property agents, check with banks on properties valuations and of course there is plenty of information on the Internet. Once you have these numbers you can determine if a real estate investment is worth spending your time for a viewing. “Seeing is Believing.” Check out the property to see the actual condition and the environment, whether it is to your liking once you get your numbers RIGHT! Once you get your numbers, you will see:IncomesOne-time income – selling priceRegular income – rental priceCostsOne-time expenses (startup costs) – down payment, agent’s brokerage, legal fees, stamp duty, furnishing cost, etc.Regular expenses (monthly costs) – monthly loan repayment, monthly maintenance fee, quit rent, property tax, etc.See how they (numbers) work..The basic requirement for a good real estate investment is that the income it generates must be more than its costs.If the selling price of a real estate investment is more than its purchase price and startup costs, this investment generates capital gain. If the rental income of a real estate investment is more than its monthly expenses, this investment generates cash flow. If you are looking for capital gain, the gain or loss depends very much on the real estate market. Hoping to make money from capital gain on real estate is like buying a product and hoping the value of the product will go up with time. On a long term basis, real estate will be appreciating in value because of inflation, but the gain is not guaranteed.On the other hand, a real estate investment that generates cash flow effectively put money into your pocket every month, while your equity in the real estate investment increases over time. This is the real estate investment that we are looking for – an investment worth investing.Too good to be true?With this recession time, you will ask yourself, “Is it the RIGHT time for me to start investing in real estate? Everything is so uncertain NOW.” In Johor Bahru, you can find plenty of real estate investments worth investing at this juncture. We discovered most of these investments that generate substantial cash flow are mainly apartments or condominiums. You can read from our upcoming article to know why apartments or condominiums are better real estate investments in Johor Bahru. Here are two recent real life cases of real estate investments worth investing in Johor Bahru.Case 1: We found a condominium in Larkin area of Johor Bahru in Octorber 2008 selling at $160,000 with existing tenant. Monthly rental income is $1400 while monthly maintenance cost is around $300 (maintenance fee plus sinking fund plus quit rent). If we finance 90% of the purchase price to buy this condominium with interest rate 4.85% with a tenure of 30 years, monthly loan repayment is estimated to be $760. Thus, this condominium is generating a net cash flow of $340 every month, $4080 every year. Total capital outlay for this investment is $24,000 for down payment including other startup costs like legal fee and brokerage. Effectively this investment gives us a yearly cash-on-cash return of 18.5%. In other words, within 6 years we would be able to take back our capital $24,000! The best thing is we still own the condominium. It will keep putting money into our pocket every month. We also have the option to sell it away when the market is good.Case 2: There is a 3-rooms apartment in Tampoi sold at $125,000 in Octorber 2008. Monthly maintenance cost is about $150. If we finance 90% of the purchase price with interest rate 4.85% with a tenure of 30 years, monthly loan repayment is estimated to be $600. Expected rental income for a fully furnished apartment in the area is about $1200. With furnishing cost of $10,000, total capital required for this investment is around $27,000, while total monthly cost is $750. The apartment is expected to generate a net cash flow of $450 every month, $5400 every year. Cash-on-cash return on this investment is 20% which we can expect to take back all the capital within 5 years.Sound interesting right? Of course, so far we are only talking about numbers. A good real estate investment does not rely on purely numbers. You still have to go and have a look at the building structures, study the location and neighborhood, and perform other checks before you make your decision. What we have discussed, however, can save you time and give you more ideas on the potential returns of a real estate investment before you tell your agent which real estate you want to view in the coming weekend.
Read more about real estate investment tips at http://reijb.com
We write regularly about real estate investment. Some of our featured articles include:
“How to estimate the value of a property?”
“Why apartment can be the best real estate investment?”
“How important is location to an investment real estate?”
Coming from a humble little town called Tangkak in north Johor state of Malaysia, OngKL has chances to learn and work both in Johor Bahru and Singapore – a conurbation with 6.49 million still fast growing population – since year 1996. He is now having a chance to contribute back to the community by sharing what he sees, what he knows and what he learns in this wonderful place.
High Return Investments Naples