Should You Invest Your Money In the Property Market?
- Written by NewsServices.com
Property investment is a long-term strategy, and while many Australians think of it as a scheme to get rich quickly, that isn't the case. Before you plunge into property investment, you need to know the truth about your options.
The demand for rental properties is high, so entering that part of the market as an investment makes a lot of sense for potential investors. And as you see your equity grow, you could potentially purchase an additional investment property without raising capital. It's also a great way to build an empire that ensures your children's futures. If you are thinking about investment property, find the best mortgage broker Sydney to help you navigate the property landscape.
Before you make any decisions, however, you should consider whether an investment property is right for you.
No, You Shouldn't
This isn't to put you off, but there are a few key red flags that suggest you shouldn't get into property investment.
If you are thinking about buying an investment property to pay less tax, then it's not for you. If this is something an accountant has advised you will help, it's not. Negative gearing is not a successful investment strategy.
If you have friends getting into property investment and you're afraid of missing out – don't go down the property investment route. It's a longer-term investment and you may live to regret it if you jump in just because others are. It's not the way to get rich quickly.
Don't think about going down the investment property route if you don't understand how it works or you're not particularly fluent in finances. And, if your finances aren't in order, then it isn't the right time.
Yes, You Should
The younger you can start your property investment journey, the better. The fewer commitments you have, the more risk you can take and it's a great way to build a portfolio. The property industry has gone through major ebbs and flows recently, and while property prices are dropping, interest rates aren't. So, unless you can afford to deal with inflation, now might not be the right time for you. That doesn't mean you can't start planning your investment.
Investing in property isn't as risky as buying shares. It is a slow burn, however, and it can take a decade for you to see real returns. In addition to a solid credit score, you need deposit money, contingency cash for unexpected times if there is no tenant and a steady income outside of investment properties. There are a lot of upfront costs you will need to cover and if you don't have a 20% deposit, you will need to fork out for Lender's Mortgage Insurance.
You should do some research about the local area you are thinking about investing in. You need to know if planning proposals will impact prices and alter the area in a way that could impact its rental value. Investors also pay higher interest rates, so that's something else to factor in.
Ultimately, if your finances are in order and you want to invest in a long-term investment, then property investment is a great option for you. There are tax benefits for property investors, it's just not enough to make it the sole reason for your investment. Be sure to speak to your accountant and a mortgage broker before you make any decisions, and do the research to find the perfect area to invest in.
