Investing in property isn’t necessarily a hobby, though some see it way. Regardless of whether a person is in the sector to earn a little extra money or making a career out of it, there are things to love – and hate – about owning a portfolio.
- Reliable income
Your homes and commercial blocks will always be there unless something extreme happens. Investing in property is often seen as a long-term, reliable investment, particularly when you have tenants.
- Good homes
Property investors have their ears to the ground, and emails in their inboxes, about the latest commercial and residential pickings up for sale. Quality within the building itself is a must; the structure being up to code, curb appeal and a recent update to the capital works are signs of a good investment.
The home itself is one part; the neighbourhood is the other. Tenants, whether they’re a family wanting to put down roots or a business looking to set up shop, will look at the neighbourhood dynamic before deciding to sign anything. Access to public transport, shops, and air conditioning are only a few of the items on their checklist.
- Turns negative to positive
You won’t make money straight away, but delayed gratification is a given when you’re investing in property. Negative gearing is when you’re spending more money on your portfolio than there are returns.
When you keep working on it though, the negative gearing will turn into positive cash flow. This happens in a number of ways; lowering interest rates, raising the rent, changing property managers and reducing certain expenses.
Rentvesting = flexibility. You want to live in your dream suburb however, housing prices are on the expensive side. But you can still rent. You have flexibility instead of another mortgage but the luxury of living in a nice suburb.
- Passion project
People don’t want to make a career out of investing in property but they genuinely love the market and browsing homes. Instead of investing some people will buy homes, renovate them and sell for a profit.
Now, where there’s a good property, there’s going to be five investors wanting it. Bidding wars happen and people miss out. This is why it’s better to be a strategist, not a romantic who buys with their heart.
Property investors aren’t afraid to share stories about the horror tenants they’ve had over the years. Wild parties, drugs and extreme disrespect of the property e.g. cleanliness are some of the tamer complaints.
Problem tenants are easily weeded out by an experienced property manager. It saves the investors time and heartache (don’t be friends with your tenants).
- Shoddy management
That being said, however, for every good property manager there’s plenty of bad ones. What does a sketchy property manager look like? Well, they advertise their services in an unpaid ad on Gumtree for one. They also don’t keep a regular inspection schedule or return your calls for days. Good management firms are often recommended by other investors. They will keep you updated and return your calls as soon as they can. Plus, all levels of staff in the office look happy to be at their job.
- Capital gains tax
Ah yes, you can’t make a profit without conditions attached. If you sell your property for a profit, then you must pay CGT. It’s unavoidable, but certain conditions and discounts are available to lessen the sting.
- Not quite liquid
Investing in property isn’t easy money. You won’t sell it for a quick profit. Good homes can spend days to months on the market. So dress it up nicely and make it a place where people want to live.
We support self-education