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Why property is still the best investment

Following recent dips in share markets and the plunging value of alternate investments like bitcoin, it’s timely to take a fresh look at why there’s a lot to love about an investment property.


1. The returns can be very rewarding

One in ten Australian taxpayers own a rental property1, and with good reason. Property has enjoyed tremendous capital growth in a number of state capitals over recent years.

Sydney for instance, saw property prices surge 75% between February 2012 and July 20172. Hobart has now taken the lead, with price gains of 12.4% over the past year2, while in Melbourne, landlords pocketed total gains of 11.2% over the period2.

Of course, past gains are no guide for the future, but there’s no reason to believe locations enjoying healthy population growth won’t continue to enjoy solid growth – and today’s cooler prices in a number of markets, such as Sydney, should be seen as good buying opportunities.

2. You can add value

Regardless of whether markets are rising or falling, one of the advantages of a rental property is the opportunity to add value through renovations and improvements. Even better, the cost of many renovations can be claimed on tax, often via depreciation.

3. Investors have complete control

While growth assets such as shares have a place in every portfolio, investors are fundamentally leaving control of the company in the hands of the board and management. By contrast, with an investment property, the control flows your way.

Property is an investment you can see, touch, and inspect, and understandably this is very reassuring for many investors.

4. It’s simple

It doesn’t take a lot of industry expertise to understand how you make money on property, and that’s a real plus. There’s no jargon, no complex maths – just the basics of choosing the best place you can afford in a suburb with growth potential.

This simplicity makes it easy for even beginner investors to understand the key features to look for in a quality property. Better still, as a home owner, you already have a first hand understanding of how the property buying and loan application processes work.

5.Rent is a source of regular income

When a tenant signs a lease, they are agreeing to pay a set amount of rent, each week, fortnight or month, for a fixed period. That’s very important for an investor’s cashflow.

The regularity and predictability of rental income is matched by few other investments. It’s money in your pocket on a timely basis, and that can assist with accurate personal budgeting.

6. Property can be very tax-friendly

The ability to claim many of the costs of owning a rental property (including loan interest) on tax, is a significant drawcard.

Being able to claim many property costs on tax doesn’t just make an investment property more affordable, it can also mean you get more tax back on your regular wage or salary.

If you’re thinking about property investing or diversifying your existing property portfolio, now’s an ideal time.

Get in touch with your local Mortgage Choice broker to discuss finance options and discover afresh why there’s a lot to love about investing in bricks and mortar.

 

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1https://www.rba.gov.au/speeches/2017/sp-so-2017-11-20.html

2CoreLogic Hedonic Home Value Index, January 2018 Results


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