Financial Planning For Property Investments 101: Proven Ways To Accomplish Your Property Goals This Year With The Right Plan

Now that we’ve entered a new financial year, the Liviti team has decided to help you make the most of this financial year by maximising your property goals and helping you conduct financial planning for property investments! Whether you’re looking for an investment property or buying your first home, we’ve got you covered!

Whether it’s a discussion about buying a family home or building a property portfolio, the steps to successful investing remain the same. You need to understand why you are investing or purchasing, how it is going to meet your needs, and what (if any) compromises you will need to make to get there. Being clear on the answer to “why” lays the foundation for determining the best steps on “how” to do it.

So, where should you start?

financial planning for property investments

Evaluate your goals that align with your financial planning for property investments

The first thing you need to do to conduct a financial planning for property investments is to set a goal. A financial goal should always be reviewed after being set. You should set aside time to reflect on your accomplishments and failures. Look at what’s possible and give yourself time to reflect on why. Using this information, you may evaluate the amount of money you spend on achieving those objectives and find holes in your planning strategy.

By going through these processes, you can determine what goals are realistic and what might take longer to achieve.

What should I do if I don’t have a plan or goals?

It’s essential for those starting to establish their financial goals in advance. Consider using the SMART method, which is used for setting achievable goals. SMART stands for Specific, Measurable, Attainable, Relevant, and Timebound; it will help you identify your goals when defining a goal and will come in handy when starting your financial planning for property investments. Additionally, your objectives must be achievable, realistic, and time-based.

It may be challenging to map out your goals at first, but an excellent way to group your goals is by creating short-term, medium-term, and long-term objective lists. Identifying these various goals is important, especially when planning Longer term goals. Long-term goals can have long-term value, and they should be assessed over a specific time frame.

For example,

  • A short-term goal might be saving up for a holiday or entertainment system.
  • Medium-term goals might include saving a 20% deposit for a property, saving for a wedding, or preparing your finances to start a family.
  • A medium-to-long-term goal might be planning an investment property strategy with one of Liviti’s expert investment strategists.
  • A long-term goal might be buying a property investment for a secure financial future and might just be the thing to properly start your financial planning for property investments.
how to conduct financial planning for property investments
Financial Planning For Property Investments 101: Proven Ways To Accomplish Your Property Goals This Year With The Right Plan 7

Assess your saving goals.

Over time, the goal to save can be adjusted or changed to your circumstances . Unlike short-term goals, like saving for holidays overseas, your focus should now be on longer-term objectives, like buying a home or an investment property in the future. Make sure you know how much your savings goals will change if you are working towards your goal in a year vs 5 years.

An excellent way to map out your saving goals is by creating a spreadsheet outlining your income and all expenses; this is an excellent resource for setting your saving goals.

Check your superannuation

Although you may not have thought about it all the time, it can be an interesting factor to consider in your financial year plans. Whether you’re planning your retirement or you’re new to the workforce, your finances should be balanced to prepare for the future. This will later prove to be an asset when you start your financial planning for property investments.

This is also beneficial when buying a first home as it’s possible to use some of your super to go to buy your first home through the First Home Super Saver Scheme (FHSS). You can even use a Self Managed Super Fund (SMSF) to help purchase a property.

financial planning for property investments 101

Buying your first home as part of your financial plan

We know buying your first home can be challenging. We’ve compiled a few things that should be included in your financial planning for property investments.

Check your credit score.

The lender can tell what kind of borrower you are based on your credit history and score. The greater your score, the more likely a lender would approve your loan application. Some lenders offer loans to borrowers with ordinary scores but at a higher interest rate.

Aim to reduce debt 

Debt is more common than you might think! According to Suncorp Bank, debt is one of the biggest money-saving roadblocks.

The best strategy for tackling your debt is to list all your debts (yes, it includes Afterpay and PayPal!) and how much you still owe. Then move on to prioritising your debts and planning which ones you should pay off first. A smart way of paying off your debt is to start with the debts with the highest interest rates and fees (personal loans & credit cards). This should help you save more in the long run!

Another way to reduce your debt is to switch your credit card for a debit card; it helps limit your spending to what you have, whilst helping you dodge interest and annual fees that come with credit cards!

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Adding an investment property to your financial plan

Understanding your property’s true cost is crucial when investing in real estate as part of your financial planning for property. One aspect of the cost of owning an investment property is the interest expense. Though, other related expenses also need to be considered, including rates, maintenance, capital improvements, property management, and strata.

Investment Property Tax Benefits

One benefit of investing in property is that there are several specialised tax deductions you can choose to claim, which include;

  • Fees for repairs and maintenance
  • Interest charges on your home loans; some upfront costs, such as establishment fees, stamp duty, and Lender’s Mortgage Insurance (LMI)
  • Home insurance
  • Strata fees
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Why your financial planning for property investments should include buying an investment property

  • It can minimise your tax return.
  • Secures an early retirement
  • Supplement your super with property
  • Pay off your mortgage sooner & reduces your debt
  • Have financial freedom
  • Build out your passive income

The benefits of an investment property far outweigh the costs associated with them, as you’re likely to make a higher return from the investment in the long run. With these tips and tools added, you’re finally start your financial planning for property investments.

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Getting a glimpse of where you stand right now and assessing your financial goal regularly will allow you to increase your quality of life through tactical investments and tax planning strategies.

Don’t know where to start? Our investment property strategy experts are here to help you every step in your property journey!

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