Build wealth with bricks and mortar

Investing in property is a chance to build wealth through long term capital growth and regular rental income. It's also a strategy that calls for careful risk management.

You don't need to have accumulated wealth to own a rental property. In fact, you can get started at any age - the key is to take a planned approach through a combination of good research and risk management.

Consider your broader aims

A rental property can be an outstanding investment but be sure this asset class suits your goals and objectives. Like all investments residential property can involve some risks, and making your property part of a diverse portfolio can reduce some of the downsides.

Is a long term approach right for you?

Property is generally regarded as a long term asset, with the best gains often made over 5 to ten years. It’s important this timeframe suits your goals. Owning the property for at least 12 months entitles you to a 50% capital gains tax discount on any profits made when you sell.

Crunch the numbers

A well chosen property will provide rental income and long term capital growth. You need to be confident your property delivers both. Research the market you’re buying in to check for future growth potential and ongoing tenant demand.

Review your budget

Check that your budget can handle a rental property. You should be able to claim any shortfall between rent and ongoing expenses as a tax deduction but drafting a budget will show how you’ll cope with property costs if the place is vacant or if interest rates rise. There can be time delays between rising rates and opportunities to increase the rent.

Landlord insurance is essential

Landlord insurance is a must for property investors. It covers the value of the building and fittings, and provides protection against repairs or loss of rent if the tenant causes damage or skips town. The premiums are normally tax deductible.

Don’t overlook personal risk cover

Personal insurances matter too. In particular, income protection insurance will provide a regular income if you can’t work due to illness or injury. For landlords with a loan it makes a lot of sense, and the premiums can usually be claimed on tax.