Property has been the investment of choice for most Australians who want to build up long term assets and provide them with a steady cash flow. Although there are many asset classes in the market – such as cash, bonds and stocks, property has been considered the primary investment opportunity in Australia for its consistent performance and returns.
It is interesting to note that even as good as it sounds, property requires a clear understanding of a lot of issues – from market trends, to taxation and property laws. This asset type requires long term planning and will cause you a great deal of financial stress, should you invest without understanding the risks. A property investor should have a clear picture of their current financial standing before they decide on this asset type.
Here are the advantages of investing in Property
Capital Growth. An investment property in a high growth area can increase your asset’s value over time. Properties provide not only capital growth, but a steady cashflow in the form of rental income.
Safe Investment. Property is a tangible investment, providing you with the peace of mind as you see your investment grow. Property is less volatile than shares, stocks and other investments.
Risk Reduction. If a loan is taken out to purchase your investment property, interest and other property expenses can be offset against your rental income. Insuring your asset also protects you from almost any risk to your asset – from fire, property damage, even tenancy issues.
Control. As a property investor, you are given the reigns of control over your asset. You decide what you think is best for your property, and you control the rental returns.
Tax Benefits. Investors enjoy tax advantages for geared properties. Among these benefits include deductible costs for negatively geared properties, where you can claim the difference between the income and cost as a deduction, lowering your taxable income. You can also claim the tax benefits from the depreciation of your property.
Strong Demand. An increase in population usually means an increase in dwellings. Choosing a property in growth areas can help you take advantage of the growing demand. In fact, property is needed to accommodate an estimated 620,000 households before 2030.
Property is here to stay. Dwellings are a basic necessity. For as long as there is a strong demand for property to support the growing population, property will never go out of style, provided you buy in the right areas.
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