Whether you’re looking at properties on the sunny beaches of Sydney or you want to invest in the bright lights of Melbourne, you should consider the pros and cons of this form of investment. In general, properties tend to be desirable for investors of all classes because they have monthly income and appreciation potential. To find out if these types of investments are right for you (and which ones you should make), read the following property investment guide for Australia!
Property Investment Guide For Home Types
There are three primary types of properties that investors buy. The first are single-family homes. Investors like single-family homes because they have a transparent ownership structure. There is no board of directors to deal with, and you can make renovations whenever you feel like doing so. Another type of property is a condo. Condos make for attractive investments as well because they tend to be cheaper and more limited in terms of what can go wrong with them. The final, but less common, property type is a multi-family complex. You might buy a building that can house four different families and rent out each section individually.
There is no universally perfect investment. If you are new to property investing, you may wish to buy a condo to start. Renting out condo lets you have a monthly, stable income and limits your downside risk (there are no foundations to crack or termite damage to repair with a condo). Condos also tend to be cheaper than homes. Although, if the area is in high-demand, condos may still be relatively expensive! If you prefer a little bit more flexibility and a higher overall return on investment, then a single-family home might be a better option for you!
Monthly Income And Appreciation
Very few investments offer potentially significant monthly income plus the opportunity for capital appreciation. It’s not unheard of to put $200,000 into a house, wait ten years, sell it for $300,000, all while making $10-20k in rent per month on the initial investment. In this hypothetical scenario, you would make 50% on your initial investment after ten years, plus 10% of the home’s value per year in rent. There isn’t another investment type quite like it!
On the downside, investment properties still require upkeep even if they don’t have a tenant. For this reason, finding the right tenant – the one that will pay market rate for a long duration – is the best way to ensure you receive the highest ROI on your investment.
Deductibility Of Expenses
If you buy property in Australia (which, with this property investment guide, we hope you do!), you can deduct many of the expenses related to the investment property. The costs of advertising, loan fees, maintenance fees, etc. are all tax-deductible. Sometimes the losses can be used to lower your overall taxes. Therefore, if you make $20,000 per year, but have to pay $5,000 in expenses, you’ll only pay income tax on the $15,000 profit. The flexibility of deductibility of costs can be fantastic during tax season!
Property Investment Guide: Australian Property Is Always A Good Buy
No matter if you’re looking for a condo or a single-family home, buying a property in this fantastic nation is always a good idea. Of course, at Buy Australian Property, we can answer any questions that you may have about these types of investments. If you want to learn more about property investing, get in touch with us today!