What is different about investing in real estate and buying a home?
Rental properties, residential and commercial, are popular forms of investment. But there are big differences between buying a home and investing in real estate.
Australians like investing in bricks and mortar. It is something they can see and touch. They can earn rental income and benefit from capital growth. And real estate is less volatile than other investments, such as shares. For many investors there is something very satisfying about getting a tax deduction through negatively geared real estate investments.
If you are inexperienced in investing in real estate it is well worth getting advice from an investment property advisor, a financial planner and your accountant. And you’ll need to research the pros and cons of investing in the target location.
Costs of ownership increase dramatically if there is an increase in interest rates or if you lose your tenant.
Capital gains are never guaranteed. The value of Gold Coast units fell by nearly 18% between the mid 90s and 2013.
Unlike shares, investing in real estate has significant entry and exit fees. When buying, you pay stamp duty, bank fees, legal fees and registration fees. And when selling you pay advertising fees, agents commission, legal fees, bank fees and, if you make a capital profit, capital gains taxes.
You may choose to invest in property through a self managed superannuation fund be sure to take care. There are strict rules about how your superannuation fund can be used and dire tax consequences for non-compliance.
Mr Stephen Rees purchased his first investment property at the age of 21, in 1976 and in the following 39 years has purchased and sold numerous properties. His experience helps us understand our clients’ needs and why it is important to take great care.
Be sure to discuss your plans with us before you invest and let us work with you throughout your purchase.