Getting Started in Property Investing For Dummies^®, Australian Edition

Getting Started in Property Investing For Dummies®

Australia Edition published by
Wiley Publishing Australia Pty Ltd
42 McDougall Street
Milton, Qld 4064
www.dummies.com

Copyright © 2013 Wiley Publishing Australia Pty Ltd

The moral rights of the authors have been asserted.

National Library of Australia Cataloguing-in-Publication data:

Author: Brammall, Bruce.

Title: Getting Started in Property Investing For Dummies/Bruce Brammall, Eric Tyson, Robert S. Griswold.

Edition: Australian ed.

ISBN: 9781118396742 (pbk.)

Series: For Dummies.

Notes: Includes index.

Subjects: Real estate investment — Australia. Real property — Australia.

Other authors/contributors: Tyson, Eric (Eric Kevin) Griswold, Robert S.

Dewey Number: 332.63240994

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Introduction

Welcome to Getting Started in Property Investing For Dummies, Australian Edition! We’re delighted to be your tour guides. Throughout this book, we emphasise three fundamental cornerstones that we believe to be true:

Property is one of the three time-tested ways for people of varied economic means to build wealth (the others are shares and small business). Over the long term, you should be able to make an annual return of around 7 to 9 per cent per year investing in real estate.

Investing in real estate isn’t rocket science but does require doing your homework. If you’re sloppy with your legwork, you’re more likely to end up with inferior properties or to overpay for a property. Our book clearly explains how to buy the best properties at a fair (even below-market!) price. (Although we cover all types of properties, our book concentrates on residential investment opportunities, which are more accessible and appropriate for non-experts.)

Although you should make money over the long term investing in good real estate properties, you can lose money, especially in the short term. Don’t unrealistically expect real estate values to increase every year. When you invest in real estate for the long term, which is what we advocate and practise ourselves, the occasional price declines should be merely bumps on an otherwise fruitful journey.

How This Book Is Different

If you expect us (in property spruiker fashion) to tell you how to become an overnight multimillionaire, this is definitely not the book for you. And please allow us to save you money, disappointment and heartache by telling you that such shysters are only enriching themselves through their grossly overpriced CDs and seminars, or are likely urging you into their property developments with funding from their related-party loans.

Getting Started in Property Investing For Dummies, Australian Edition, covers tried and proven real estate investing strategies that real people, just like you, use to build wealth. Specifically, this book explains how to invest in houses, units, apartments, small apartment blocks, commercial properties and raw (undeveloped) land. We also cover ‘indirect’ real estate investments such as real estate investment trusts (REITs) that you can purchase through the Australian Securities Exchange or a real estate managed fund.

The objective of our book is to give you the best crash course in property investing, so that, if you choose to make investments in properties, you may do so wisely and confidently.

Foolish Assumptions

Whenever authors sit down to write books, they have particular audiences in mind. Because of this, they must make some assumptions about who the reader is and what that reader is looking for. Here are a few assumptions we’ve made about you:

You’re looking for a way to invest in real estate but don’t know what types of properties and strategies are best. (We’ll show you.)

You’re considering buying an investment property, be it a house, a unit, an apartment or flat, a small apartment or unit complex or an office building, but your real estate experience is largely limited to renting an apartment or owning your own home.

You may have a small amount of money already invested in real estate, but you’re ready to go after more or bigger properties.

You’re looking for a way to diversify your investment portfolio.

If any of these descriptions hits home for you, you’ve come to the right place.

How This Book Is Organised

We’ve organised Getting Started in Property Investing For Dummies, Australian Edition, into four parts. Here’s what you can find in each.

Part I: Understanding Real Estate as an Investment

In this part, we explain how property compares with other investments, how to determine whether you’ve got what it takes to succeed as a real estate investor, and how much money you’ll need to invest in various types of real estate. We cover why your home isn’t really an investment property and why a holiday home can be both home and investment property. We also discuss the range of real estate investments available to you — such as residential and commercial properties — and researching property trusts.

Part II: Financing: Raising Capital and Sourcing Loans

You can’t play if you can’t pay. This part details how and where to come up with the dough you need to buy property. We explain the common loans available and some not-so-common ways to finance property investment. We also share all of our favourite strategies for finding and negotiating the best deals when you need a mortgage.

Part III: Finding and Operating Properties

This part looks at the rules of buying real estate right. We tell you how to determine where and what to buy. In this part, you find out how to choose the best locations and how to project a property’s cash flow. We also take a look at the ongoing costs of real estate and what you need to consider to cover those expenses. Importantly, we also focus on the basics of being a landlord, and how to find and keep the best tenants and sign solid lease contracts. And finally, we provide some tips on building a property portfolio, as you look at purchasing your third (fourth, fifth, sixth . . .) real estate investment.

Part IV: The Part of Tens

This part contains ten important tips that didn’t fit neatly into the rest of this book. This section includes ten ways to increase a property’s return, from raising rent prices, to subdividing and developing, and taking advantage of tax benefits.

Icons Used in This Book

Throughout this book, you can find friendly and useful icons to enhance your reading pleasure and to note specific types of information. Here’s what each icon means:

This alerts you to those who may have conflicts of interest or offer biased advice, as well as other concerns that could really cost you big bucks.

This icon flags concepts and facts that we want to ensure you remember as you make your real estate investments.

Included with this icon are complex examples and interesting technical stuff that you may want to read to become even more familiar with the topic.

This icon points out something that can save you time, headaches, money or all of the above!

Here we’re trying to direct you away from blunders and errors that others have made when investing in property.

Suddenly investing in real estate is much easier with research tools a mouse click away. This icon highlights the most useful sites.

Where to Go from Here

If you have the time and desire, we encourage you to read this book in its entirety. It provides you with a picture of how to maximise your returns while minimising your risks in the property market. But you may also choose to read selected portions. That’s one of the great things (among many) about For Dummies books. You can readily pick and choose the information you read based on your individual needs.

Part I

Understanding Real Estate as an Investment

Glenn Lumsden

‘. . . and if the real estate market ever nosedives, you can always just live off the gingerbread.’

In this part . . .

Real estate is just one of many available investment options, so, in this part, we compare real estate investing with alternatives you may consider and look at how to fit real estate into your overall financial plans.