Investment property is real estate purchased with the intention of earning a financial return. When the owner rents to a resident or a business, this return can be referred to as rental yield. It could also be future profits if the property is sold for a profit. The primary goal of an investment property is typically to generate wealth and passive income. This means that the characteristics of an ideal investment may differ significantly from those sought when purchasing a home for personal use. Unlike some complex investments, investing in real estate does not necessitate any specialised knowledge.
Some benefits of buying an investment property are:
- The property can be less volatile than stocks or other types of investments.
- If the property is rented, you will earn rental income.
- If the value of your property rises, you will benefit from a capital gain when you sell.
- Most property expenses, including interest on any loan used to purchase the property, can be deducted from rental income.
- You are investing in a physical investment that is tangible, so you can see and touch it.
Purchasing, managing, and selling an investment property can be expensive and have an impact on your overall return. Investing in overseas property is also riskier than investing in Australian property. The decision to purchase an investment property should be part of your overall investment strategy, taking into account your objectives and risk tolerance. Once you’ve decided on a property, compare the expected income to your outgoing expenses. You need to consider whether you can cover the expenses in the long run if there is a shortfall. Also, consider whether you could cover all expenses in the short term if you didn’t have any tenants. Investigate the real estate market to determine how to acquire an investment property. Your return on investment will be affected by where and what you buy.
Where should you buy it?
It will take time to research areas you are familiar with. It is a good idea to look for areas with strong growth, high rental yields, and low vacancy rates. You can use the services of a property buyers agent to learn about proposed planning changes in the suburb that may have an impact on future property prices.
What to look for?
Your property agent will help you look for properties with appealing features such as a second bathroom, a garage, and proximity to schools, shops, and public transportation. It is also a good idea to consider maintenance costs based on the type of property, its age, and its features. If your agent has factored it into your budget, you might be up for the challenge of renovating a property that needs minor repairs.
When it comes to property investment, there is no shortage of advice available on what aspiring property investors should do to ensure success. However, no amount of information will be as beneficial as an experienced professional property buyers agent with the knowledge to assist you in buying an investment property while dodging the pitfalls in order to avoid becoming a property statistic.