Five Benefits of Owning an Investment Property There are many benefits to owning an investment property. If you are in the position to do so it can be financially beneficial to choose property investment. Like everything to do with money it is wise to get the right property investment advice, so speak to your financial planner, your money lender and real estate professionals. Investment Capital growth Through owning an investment property you will see a long term growth in your capital. Buying a property is usually a long term investment. When you purchase the property it is normal to intend on having that property in your possession for a long period of time. If you purchase land you can increase the value by building a house, and in time both the land and home will increase in value. If you do go to sell the property you are likely to make a decent return on your initial outlay. Minimise tax You are able to claim any depreciation on the buildings fixtures or fittings, and if the building is new or bought off the plan then you can claim for the maximum amount. Make sure that the structure of the ownership of the property is considered carefully as this can affect the investment property tax deduction rate. You may own the property yourself, or joint own it with a partner, or it could even be owned by a company. You can also get tax benefits through negative gearing. Renting You may choose to rent the property out. There are many benefits to renting a property, the main one being an increase in your cash flow. Your tenants can effectively pay your mortgage for you on the property, with their rent covering some, if not all your mortgage. You even may choose to make additional payments to speed up the process, which in the long run will mean you pay less interest on the loan. It is a good idea to have a real estate agent handle the lease for you, and make sure that the tenants pay bond. Don’t accept tenants into your home on a hand shake agreement. Future use You may choose, down the track, to move into the investment property yourself. Depending on where you purchase the home, you might decide in the future to use the home as a holiday home. An investment property does not just have to be a residential property in the suburbs. You might buy a beach home, an apartment in the city, a bush block or a rural property. Other types of investment properties can include commercial property, a warehouse, a shop or vacant land. Secure investment Buying property is considered a more secure investment than some other types of investments, including investing in shares, super funds or investing in a start up business. There is a certain element of risk to all investments but some are more volatile than others. Shares are affected by global financial activity, and the recent global economic downturn has seen many people lose a lot of money on the shares, as well as through their super funds. A new business starting up carries a lot of risk as there are many factors involved in it being successful. There are risks with investing in property, for example your house may burn down, but being a physical asset you have a lot more benefits. By Jackson Douglas
Posted on: Sun, 15 Sep 2013 14:06:09 +0000
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