Venturing into property investment can be exciting, volatile and daunting. It can also be very profitable. Ron Bakir is the CEO of HomeCorp, a large Australian urban planning company that has developed more than 1,500 residential lots across the country since its genesis in 2004. Using his wisdom, here are five reasons why you should purchase an investment property.
Rental Income
One of the biggest benefits of getting into the property investment game is the receipt of rental income. Many property owners rent out their apartment, house or office space to tenants and then simply use the rent money to help pay off the mortgage. Remember to do the maths before you invest and ensure that you will receive an adequate amount of rental income to offset the cost. Ron Bakir and the team at HomeCorp also know the importance of creating supply where there is demand; is your property’s location popular with renters?
Diversification
If you’re a smart, dedicated investor, chances are that you have a diversified portfolio. This means investing your money in different asset classes, such as defensive instruments (fixed interest and cash) and growth instruments (property and shares). By doing this, you are minimising the risk that comes with investing. Think about it: if you have invested solely in shares and the market takes a dive, where does that leave you?
Freedom
Sometimes the simple things in life are the best. When you own an investment property, much like owning your own home, you are completely in control. You get to choose which type of property you will have, which tenants to lease to, what the property will look like and you can always move into the property yourself if need be. Unlike a homeowner, however, you receive the benefit of having tenants to help you make mortgage repayments instead of shouldering the entire burden alone.
Tax Benefits
Depending on your country’s tax system, there may be significant tax benefits if you purchase an investment property. Often, deductions can be claimed for expenses such as interest from any loans you paid, agent fees, depreciation, council rates, advertising, and repairs and maintenance. Ensure that you research this well in order to fully take advantage of any potential gains.
Appreciation
When you purchase something such as a car, over time it will naturally depreciate in value due to wear and tear. Similarly, the furniture and appliances within your investment property will decrease in worth as your tenants use them. Your property may even need repairs or renovations from time to time. The unique thing about property, however, is that it can increase its value or appreciate. This is, of course, if you have chosen your property wisely; if you’re in a property hotspot, your property’s value will skyrocket before you!
Will you be taking the plunge and investing in a property? Or are you a seasoned investor with tips to share? Share your thoughts now by commenting in the box below.
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