FAQ About Property Investment
- Why Invest in Residential Rental Property?
- The Tenancy?
- Finance and Taxation Advantages?
- What are the Potential Risks?
- The Aurum Advantage
Why Invest in Residential Rental Property?
Aurum provides an opportunity to invest in residential property that can give you:
- The ability to repay your own home mortgage significantly earlier than you previously thought possible with little or no additional cash outlay than you are currently incurring
- A more stable and higher quality tenant
- Potential for capital growth
- Possible significant taxation advantages
The tenant-friendly properties are "turnkey" - finished with a high quality fit-out. (See Aurum Specification.)
The property management company completes a rigorous check on each prospective tenant. In addition, the property manager conducts four on-site property inspections per annum.
There is a contracted lawn mowing and gardening service to ensure the grounds of each property are maintained to a high standard. The contractor reports back to the property manager if there are any tenancy irregularities.
Finance and Taxation ADVANTAGES?
Prior to acquiring a property you will need to have your current financial situation thoroughly assessed to ascertain if this opportunity will meet your investment and risk management objectives.
Most property ownership costs (ie. rates, repairs, insurance, mortgage interest, management, etc) are tax deductible on an annualised basis. Your accountant will apply for a special tax code to be put in place on your behalf with the Inland Revenue. This should increase your take home pay and these funds are then used to accelerate the repayment of your mortgage.
What happens if I die or get sick?
You need to discuss and/or arrange appropriate insurance to cover any financial risk associated with early death or loss of income through sickness or accident whilst there is a mortgage on the property.
You must assess your own circumstances. You must ensure that your financing flexible and will allow for a short term rearrangement. Talk with your mortgage advisor if you have concerns.
What if interest rates change?
Interest rates can fluctuate. You need to ensure that your mortgage advisor provides you with sufficient flexibility to accommodate higher interest costs.
If interest rates drop then the mortgage will be repaid earlier as repayments should remain constant.
What happens if I can’t get a tenant?
Because you have a high quality home in a high demand rental locality, the likelihood of no tenant is very low. However, all that is required to procure a tenant is to "meet the market". A competitive reduction in rent will only extend the term for repaying the mortgage.
What happens if the property is damaged?
Your Aurum consultant will arrange a landlord's protection policy specifically written for the residential rental property market. The policy provides for comprehensive dwelling and contents insurance coverage.
What happens if the tenant defaults?
The landlord's protection policy provided has a component for tenancy default and tenant absence from the property.
No. Aurum are only building quality subdivisions in high-demand areas. Aurum have to date not experienced any difficulty in renting the houses on completion. Rent may rise or fall with the market. There is sufficient flexibility in the Aurum programme to accommodate lower rent.
The Aurum programme is not dependent on capital growth. Aurum does not guarantee capital growth.
However, on its fundamentals (high quality property, desirable locality, strategic geographic locations, etc) over time Aurum would expect some capital growth to enhance the outcome
- Financial flexibility to accommodate adverse events
- Insurance to protect against unforeseen financial events
- Building company's quality assurance complete with up to a 7 year Master Builders Guarantee or a 5 year Certified Builders Guarantee
- Attractively-priced land and building packages
- Aurum acts as the coordinator of all the services and oversees the programme
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