We have met many clients who state with some cynicism that Financial Planners only recommend managed funds and Real Estate Agents see only property as the path to wealth. Some also link this to the perceived vested interest of the aforementioned professionals.

There is also the very real consideration that neither Financial Planners nor Real Estate Agents are legally authorised to advise on each others area of expertise.

Insight Wealth Partners are NOT legally authorised to make specific recommendations on buying or selling property. We cannot tell you that property A is a better buy than Property B.

Where we do differ is that we recognise that direct property investment is a legitimate strategy and one that many Australians are deeply fond of. Instead of arguing the merits of shares versus property, if you are keen to hold direct property we would like to discuss strategies that include both.

We will also challenge you to think of the end game with your property purchase. For instance if you are 62 and would like to retire at 65, borrowing money to buy a rental property that you will sell in three years time is quite clearly a high risk strategy. However if you are 47, have just paid off your home, are salary sacrificing to superannuation already and you wish to buy a rental property that you will pay off by retirement so the rent can be part of your retirement income, well that is a different proposition entirely.

We would like you to understand Negative Gearing. We worry when we hear people say “I am going to do negative gearing because I need a tax deduction”. You should never let the tax tail wag the dog. Negative gearing gives you a tax deduction because the cost of owning the property (loan interest, rates, depreciation etc) is GREATER than the income (rent) that you receive. If you are negative gearing you are LOSING MONEY. You make money from capital growth or by repaying the loan so the ratio of income to expenses becomes positive. You must understand this before borrowing to invest.

Our approach to property investments is to help manage the manageable risks, for instance insuring your income so you aren’t forced to sell when you are off work due to a long term illness and your tenant moves out and considering your exit strategy. Then we will factor rent and loan repayments into our projections for your longer term financial planning goals.

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