These days, anyone can be an investor. If you have shares or managed funds, you’re in the loop. But for an investment existing beyond numbers, property takes the front row seat. More and more Australians are choosing to park their money and savings in bricks and mortar with the hope of boosting their wealth over time.
In 2010 the Index of Consumer Sentiment revealed that property investment ran a close second (21.7 per cent of respondents) to bank account deposits (29.2 per cent of respondents). Similar trends have continued into 2011.
There are pros and cons to every ‘money sinking’ decision but let’s first look at some of the benefits of property investment.
- Property is a more stable than shares and other intangible investments at the mercy of ever changing markets.
- There’s always the chance that your property will increase in value, leaving you with capital growth.
- Rent becomes an extra income and helps repay whatever loan you take to buy the property in the first place.
- The interest on investment properties loans are tax deductible.
- Your investment exists in real life.
That’s not to say there aren’t some cons to mull over. There are, after all, always two sides to every story.
- Rental income goes some way in filling in those repayments but doesn’t always cover it all.
- You are at the mercy of interest rate hikes and trends in the property market.
- Tenants come and go and there might be times the property stands empty.
- The entry and exist costs are high.
Luckily, taking the rose coloured glasses off and facing these downsides is made easier by dependable mortgage and lending companies. Home loans have always been enmeshed with the idea of the “Great Australian Dream” and for anyone interested in property investment, it’s a well-trodden consideration.
Another two factors to consider when deciding on property investment, and related home loans, are where and what to buy. Everyone will have an opinion on this but wide research should be the first port of call. To help you out, there are a number of online resources at your disposal.
Where? In a nutshell, you have to be thinking about high growth areas, appealing features like proximity to transport, vacancy rates and possible changes to the suburb in the future.
What? Everyone has specific taste but you’ll be doing well if your property has wide appeal. You don’t want to alienate segments of the market like singles or retirees. Most importantly, choose somewhere with low maintenance costs and upkeep.
Keeping all this in mind should stand you in good stead. Happy brick and mortar hunting!
Post by Gemma Deavin.