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Property Investment: is it right for you?

By Opulent Accountants|Monday Jan 29, 2018

There has been a major rise in real estate investment in Australia in recent times and it is not really difficult to see why this is happening. It is a sure thing that demands for houses will continue to rise as the population of any country continues to increase but in addition to this, there are also the low-interest rates on loans and other factors which may support investing in property. 

As you already know about all investments there is a significant risk involved and there is always going to be a downside. In this post, we will open your eyes to those risks and other available options in the industry which may suit you better. In the end, you will no doubt be wiser and be able to decide whether property investment is truly for you or not. So please keep reading. 

Why should you invest?

There are so many reasons why one should invest in property and the obvious swell in demand is the first that comes to mind. This increase in demands means that the value for these properties will continue to soar higher which means increment in profit when the owner decides to sell.

There is also the fact that one can continually get income from the rents while also being able to cash in some more money in the future is the house is sold. These rents can as well help to pay off the mortgage while the owner virtually pays nothing to gain ownership of the house.

Furthermore, property investments are less volatile when compared to other assets like shares and bonds.

What is the downside?

Of course, as with every business, there are negatives to owning houses and other landed properties. First one should know that even with the increase in population in a country, the value of houses in a particular area or political state can drop due to so many other factors out of the owner's control.

Some of these factors include war, insecurity in the area, lack of or destruction to existing social amenities, reduction in infrastructure, and every other thing that may tend to result in emigration.

Houses are usually good long-term investments and may result in bad short-term investments because sometimes it takes longer than estimated for the value of properties to start to rise. It may also take months to sell a house at the right price which may result in selling it below the market value if liquid money is needed as a matter of urgency by the owner.

There is also too much risk involved in buying up a big property as it seen as putting too much or all of your eggs in one basket giving less room for diversification which may help reduce overall risks.

What options are available?

Investment vehicles such as managed funds and real estate investment trusts are available in Australia which can both serve as good alternatives to outrightly purchasing properties and can help you in getting a pie from different sectors of the industry.

In order to learn more about these options and assistance in helping you choose what is best for you depending on your current needs and financial situation, contact Professional Business Accountants and Tax Agents in Melbourne from Opulent Accountants.

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