Property investment is hotter than ever
March 01, 2012
The rental market across Australia means investing in property is an attractive proposition today for both first home buyers and existing property owners.
Generally speaking, across the country rental returns for property investors are healthy and vacancy rates are low. Where there is a current shortage of rental properties, there’s likely to be a queuing of potential tenants to help pay off your investment.
However, Australia is a big place made up of many individual property markets all facing their own set of shaping factors. This means potential tenants may not be so thick on the ground, vacancy rates may not be as low as in the next town or next suburb, but your investment remains solid.
Don’t overlook this year as the opportunity to expand your investment portfolio.
Your first step should be a discussion with your property manager, financial consultant and real estate agent, which your local LJ Hooker team can deliver.
The key objective of investing is to maximise your financial returns; therefore you need to remove any emotion or prejudices you may have concerning property type or location. Don’t rush into the market – do plenty of research.
For example, you might want a newer home that delivers better depreciation allowances and sits well with your negative gearing strategy. Or you might want an older property that delivers an excellent income. The key is to have an open mind.
Consider different type of structures. While houses are a traditional choice, apartments are cheaper to maintain and generally yield higher rental returns. Units on the other hand, have the advantage of providing higher depreciation entitlements.
Find out and understand the many factors that will impact on your rental returns, including vacancy rates, average age of the rental stock, zoning, government regulations, availability of car parking, and proximity to public transport, shopping centres, schools and other amenities or services.
Don’t leave yourself exposed. Negative gearing is a viable wealth creation strategy, but it is important to remember that a loss for tax purposes is still a loss and you must be able to bear even if your circumstances change. And remember that property investment is best considered a long-term strategy.
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