Invest to build wealth – a proven post Defence Force investment strategy
The team at Capital Properties have seen what it’s like when people leave the Defence Force without a retirement strategy. Suddenly your ADF cover stops, along with the death and invalidity benefits – as it’s designed only for serving members of the ADF. And transitioning from a military role to a civilian role can be difficult, leaving some people in a real financial crisis. That’s why a post-Defence Force property strategy is essential.
And that’s also why our mission is to help you make the most of your current position in the ADF and start now to build wealth for future financial security.
During our FREE Capital Properties Discovery Session we’ll help you get on top of your financial literacy and help you formulate a plan to start now to ensure your future is bright. You’ll gain access to our Property Investment Specialists who’ll share their extensive knowledge as well as our Capital Property Investment Tools & Apps.
Plus, with our Capital Properties Pinnacle Support Program you’ll be supported with ongoing expert guidance and advice.
On the go? Here’s 30 seconds of take outs:
- A post-Defence Force property strategy is essential.
- The sooner you start, the brighter your future will be.
- Property investment is a good wealth-building strategy for:
– Capital growth
– Cash flow generation
– Tax benefits
– Inflation hedge
- As an ADF member you’re entitled to rental assistance, tax benefits & home-buying incentives.
- You can also use your property as your principal place of residence (PPR) for main residence exemption on capital gains tax when you sell.
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Why property investment?
The best investment strategies for ADF members in Australia will ultimately depend on individual circumstances. At Capital Properties we work with you to identify your financial goals and risk tolerances so we can develop a plan that’s tailored to your needs.
In our experience, we’ve found property investment to be one of the best/if not THE BEST investment strategy for building wealth. Property investment is usually far less volatile than shares or other investments. Even after a global pandemic, here in Australia our property market is making a strong recovery.
The recent CoreLogic Monthly Housing report (Feb 2023) shows that national home values are still higher than this same period last year, and “would need to decline a further 13% to reach March 2020 levels”. As well as that, the Australian gross rental yields rose to 3.9%, up from 3.21% a year earlier, making it the highest rent yield since November 2019.
So, let’s take a closer look at why property investment is a good wealth-building strategy and why you need a post Defence Force property strategy.
– Capital Growth
Property investment can be a wise investment for several reasons. Here in Australia there’s excellent potential for long-term capital appreciation as properties tend to appreciate/accumulate over time. That’s especially achievable if you know when and where to buy and are skilled enough to invest in desirable areas during times of economic growth.
– Cash flow generation
Good property investments will generate regular income in the form of rent. This provides a steady stream of cash flow that can be used to cover any expenses associated with the property, pay down the debt and/or reinvest in additional properties.
– Tax benefits
Property investment can offer a multitude of tax benefits, including deductions for mortgage interest, property taxes, and depreciation over time.
– Inflation hedge
Property investments can provide protection against inflation by providing rental income that also increases with inflation. And the property value is likely to increase as prices rise. This is an especially important piece of the post Defence Force property strategy.
Risks with property investment
As with any investment, there are risks involved. Property investment is vulnerable to economic circumstance, changes in government regulations or natural disasters. That means that property values can fluctuate, and there may be periods where it’s difficult to find tenants for your rental property. However, with careful planning and research, property investment has proven to be a sound financial decision for ADF members.
What makes property investment so attractive for ADF members?
The short answer is rental assistance, tax benefits and home-buying incentives!
As a member of the ADF, you’ll be able access rental assistance that can cover a significant portion of your rent. Which in most cases makes it possible to put some of your income towards building a property portfolio.
Additionally, there are tax benefits associated with property investment, including deductions for expenses such as repairs, maintenance, and interest payments on your mortgage. And finally, there are some awesome home-buying incentives for ADF members.
Why rental assistance can give you a head start in property investment
ADF rental allowance (RA) subsidises the cost of renting for eligible ADF members. You can check eligibility here. Once approved, the RA will be paid directly into your pay. You’ll need to renew the RA agreement each year and update any changes to your personal circumstances or operational activity and apply for any reimbursements.
Because your rent is subsidised, you should be able to save more from your fortnightly pay. We’ve found that for most ASF members, it’s achievable to save 20% of your income towards financing your property investment(s). If you start now and funnell that 20% into investment property, we promise you’ll thank yourself further down the track.
Property investment tax breaks
We’ve written in depth about the tax breaks you can take advantage of whilst in the ADF in this post about “Tax minimisation strategies”. Put simply, you can claim back on:
- Interest paid on your property investment loan
- Managing Agent fees
- Water & council rates
- Building & landlord insurances
- Bank fees & disbursement set up costs
ADF home loan incentives & home loan grants
As an ADF member, you’re also likely to be entitled to some great deals on home loans and government grants. Again, we’ve covered these in greater detail in this post “Australian Defence Force Home Loans.”
They key thing to consider is that most of these incentives are only accessible if you’re an active ADF member. So what happens when you retire/leave the ADF?
What’s your post Defence Force property strategy?
Have you thought about what happens once your rental assistance ends and you’re no longer eligible for grants and incentives? Depending on your circumstances, you may find that you no longer have the same level of disposable income that you had while receiving rental assistance. At this point, it’s worth reviewing your assets to see how they can be used to help you achieve your financial goals.
Your investment property can be more than just an investment
One option is to consider using your property as your principal place of residence (PPR). This can provide several benefits, including the ability to take advantage of the main residence exemption on capital gains tax when you eventually sell the property. Additionally, owning your own home can provide a sense of security and stability, especially if you’re transitioning out of the ADF and into civilian life.
Of course, the decision to use your property as your PPR will depend on a range of factors, including your financial goals, your lifestyle preferences, and your long-term plans.
The property investment experts at Capital Properties can help you weigh the pros and cons of this option and determine the best course of action for your individual circumstances.
Now’s the time to consider your post Defence Force property strategy
There’s little doubt that investing in property while serving in the ADF can be a smart financial move, especially if you take advantage of rental assistance, tax benefits and home loan incentives/grants. And it’s especially important to consider how the decisions you make now will support your future lifestyle.
Once your rental assistance ends, it’s worth considering how your assets can be used to help you achieve your financial goals, including the possibility of using your property as your PPR.