Only being interested when the market is hot

A lot of people decide to become property investors when house prices are rising.

In reality, you should have been buying three or four years ago. When it is doom and gloom, that is when you should be buying.

Buying in the wrong location

Investors should look for places where there was population growth, infrastructure and employment.

You've got to invest in those locations for growth. It helps people get the next deposit and keeps cashflow robust.

Not getting advice

Property investors should have an accountant with experience in property investment, a property mentor or a financial adviser to talk to. Local property investors associations can be helpful also.

It's important to have a plan and review it regularly

Talk to a lawyer and accountant to get the right ownership structure in place.

Trusts are great for asset protection but bad for tax efficiency. If the property is making losses, you could get stuck there.

Thinking finance is just about getting a loan

Fix parts of your loans on different terms, such as some floating, some fixed for a year, two years and three years, so they would come up for renewal at staggered intervals.

It smooths out the interest expense and means you can avail yourself of opportunities when low interest rates are offered.

Olly Newland cautioned against borrowing too heavily on your own home. "You shouldn't borrow more than the rent from the property will cover."

Not doing the numbers

People don't know the difference between the gross yield of a property - a basic calculation of the rent coming in as a percentage of the purchase price - and the net yield - what they would earn after all the costs were taken into account.

Costs could easily make the difference between a purchase being a good opportunity or a long-term drain on finances. - David Whitburn, project manager at Fuzo Property

Not managing the property well

Investors should ensure they had enough money aside to cover repairs and maintenance, and keep on top of it. Many would end up not putting rents up often enough or not knowing how to deal with problem tenants.

Source

Presentation is key to attracting the best price and buyer appeal to the home. Here are a few key aspects that can put a buyer off purchasing a home:

Bad smells.
Prior to your first open home or viewing make sure your house is free of all pet smells, stale cigarette smells, stale food smells, damp smells or anything else that will give a negative first impression.
   
Clutter.
This is a recurring theme in any list of how to get your property sale ready and it can’t be overstated enough. Make sure all floors, surfaces, cupboards and shelves are free of piles of your own belongings, leaving only organised, purposeful items and one or two ornamental items that elevate the space rather than merely fill it. As well as making the house appear neat, tidy and well looked after, it will also help potential buyers visualise their own furniture and belongings in the property. If your budget allows you may also wish to consider having the property staged with rental furniture designed to appeal to your target market.

Dirt.
The need to clean might seem obvious but it’s worth getting a fresh set of eyes (such as your sales consultant) to let you know what needs work – or even a professional cleaner through the property. They will notice things you may not, but a good place to start is to do a thorough clean of all floors, walls, skirting boards, windows and sills, mirrors and tiles. Cleaning and decluttering also extends to the outside where you should make sure you have cleared any flotsam from the garden. Also make sure the garden is weeded, all mildew is waterblasted from surfaces and the fences and gates are well maintained.
   
Dampness.
Consider investing in a dehumidifier and give it a good workout before potential buyers view the property. Wipe any signs of mildew from walls, windows and sills. Make sure your bathroom feels light and well-aired.
   
Vendors on site.
As a rule potential buyers do not want you, the vendor on site during a viewing. It will make them feels as though they are guests in your home, rather than buyers at a viewing. They will feel less free to give the property a good investigation and imagine themselves living there.
   
Temperature.
It’s a bit of a tough one this as everybody is comfortable with different temperatures but try to avoid your property being too cold or too warm on viewing days. Aim for dry and comfortable.

Source.

The bright line tax property rule says you’ll pay tax when you buy and sell a residential property unless the home you are selling, is your main home.

It's important to note that for need to have used a property as your main home for 50% or more of the time that you’ve owned it and used 50% of the area of the property as your main home. For example, if you use 40% of a property as your home and 60% as a rental property, you can’t use the main home exception.

Another important note to make is that you can't use the main home exception more than twice over any two-year period.

This includes if the property is located overseas.

If the home is held in a trust, the main home exception can still apply if the house sold was the main home of the principal settlor of the trust (the person who has made the biggest financial contribution to the trust), or the principal settlor didn’t have a main home, and it was the main home of a beneficiary of the trust.he bright-line rule does not apply if you sell a property you inherited.

The bright line tax rule does not apply if you inherit a home

So, if the residential home you're selling is not your main home and you bought it from the 1 October 2015 to 28 March 2018, inclusive: the two year bright-line rule applies.
If you bought the property on or after 29 March 2018: the five year bright-line rule applies.

But whenever you buy a property intending to resell it, you’ll need to pay tax on any profit you make when you sell that property.

Before you pay the income tax you owe on your property sale, you’ll need to complete an income tax return. You’ll generally include the amount of property income you’ve earned in the “other income” box on your return.

You’ll also complete an IR833 Property Sale Information form and submit this along with your income tax return.