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Property Investment and its Benefits

By Sam Kopuz

The benefits

  • Property can be less volatile than shares or other investments
  • You can earn rental income and benefit from capital growth (if your property increases in value over time)
  • If you take out a loan to purchase an investment property, interest on the loan and most property expenses can be offset against rental income, for tax purposes
  • You are investing in something you can see and touch

Where to buy

  • Think twice about investing in property markets you are not familiar with
  • Look for areas where high growth is expected, in other words where there is potential for capital gains. Property experts regularly provide tips on up and coming suburbs, just make sure you are aware of any biases they may have
  • Look for areas where rental income is high compared to the property value
  • Research recent sale prices to give you an idea of what you can expect to pay for property in the same area
  • Find out about the vacancy rates in the neighbourhood. A high vacancy rate may indicate a less desirable area. This may make it harder to rent the property and may make it difficult to sell in the future
  • Research proposed changes in the suburb that may affect future prices. Things like planned developments or zoning changes can affect the future value of a property. Don’t assume that last year’s boom will continue this year.

What to buy

  • Look for properties with features that will appeal to as many people as possible, such as a second bathroom, lock up garage or somewhere close to shops, schools and transport
  • Look for a property that will attract more than one segment of the rental market such as singles, couples, young families or retirees
  • Low maintenance costs are important
  • Units can be easier to maintain than houses, although you will have to pay body corporate fees
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