Australian investors have a lot of options. Between stocks, bonds, commodities, and precious metals, there are plenty of decent places to grow money for the future. However, while all these investments offer some advantages, there are a few reasons why properties may be the best investment of all.
Solid, Long – Term Growth
Australia as a country is growing fast with new immigrants coming in every day. These people all need places to live and housing demand isnt growing fast enough to keep up. This is helping push up real estate prices across the country, especially in the major cities. Investors that buy up properties now can take advantage of this long-term trend and will see good, steady growth from their investment. While the housing market has its ups and downs, it tends to offer reliable gains in the long-run because at the end of the day, people always need a place to live.
Immediate Cash Flow from Rents
Investment properties also create an immediate financial benefit for their owners. As soon as someone buys a property, it can be rented out to a tenant. This regular stream of incoming cash will help pay down the property loan so that the owner builds equity without putting any more money down. If a rental property is managed right, the rents should go up over time as well which means the owner may start taking in more per month than the cost of the home loan. This is a nice income boost. Once the loan is paid off, all this rental income is pure profit. Other investments dont generally offer this immediate, incoming cash flow but properties do.
The Australian government wants to encourage property investors because its important to keep growing the housing market. As a result, properties have a number of tax advantages that help make them more affordable. Investors will generally be able to deduct the expenses that come up for running their properties. This includes costs like the real estate agents commission, the cost for repairs and maintenance, land taxes, and the marketing costs to find a tenant. By using these deductions, property investors will lower their tax bills by also growing wealth for the future.
Easy to Understand
As far as investments go, properties are pretty simple. Investors can tell if a property is a good investment generally by seeing if its a place they would want to live in. Since everyone lives in a home, its easy and relatable to make these decisions. Investments like stocks are quite complicated. Its take a strong financial background to make good decisions and even professional investors dont understand everything. Properties are a generally better choice for normal Australians.
With these benefits, its easy to see why properties are such a solid investment. With a decent investment plan, any Australian can grow wealth through properties.
Getting the right home loan
When investing in property it is important to ensure you get the right home loan. Ensure you compare the different types of home loans and talk to a finance professional when you are considering investing into property. Find more information on home loans at BankSA.
This was a blog post by Lara Seers. Lara is a real estate agent for properties in Queensland. She is a professional finance writer specialising in home financing across Australia.