Since we offer both mortgage consulting and financial planning, we are in a unique position to observe the Perth property market. Our financial planners see property investment from a lot of different points of view. Since everyone’s financial situation is different, we can’t give any individual advice on a blog such as this one. But we can offer up the pros and cons of property investment.
Advantages of Property Investment
Property is a tangible investment. Many assets are only seen on paper, but a home can be seen and touched. Property also forces the investor to invest on a regular basis. If you are able to achieve positive gearing, tenants not only pay the interest on your loan but supply you with cash flow.
There are a plethora of tax benefits for landlords. One of these is depreciation on the building, which helps offset the capital gain if you sell the property down the road.
Property investment is one of the more easy to understand investment vehicles. It can also be said that most people turn a profit if they hold onto a well-maintained, well-selected property for a period of twenty years or more. Property investment allows you to leverage the bank’s money to profit off of the property’s capital growth.
Property has a track record as a consistently good, long term investment. Because it can’t be immediately bought and sold in most cases, property protects the investor from a propensity towards “knee-jerk” reactions to the market.
Disadvantages of Property Investment
There are risks and disadvantages to property investment, too. The entry level is a bit high for many. Even in the Perth market, a property investor who doesn’t do their homework and selects the “wrong” property in the wrong location can lose money. If an investor is contributing their own money towards the investment and suffers a sudden emergency or loss of income, it can become problematic.
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To learn more, call our Perth office today: 08 6462 0888.
