Three reasons to consider investing in property



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Property investment has been a hot topic in recent years. The current trend is seeing many Australians talking about investing in property, with many already looking at investment home loan options.

Recent figures from Roy Morgan reveal that, among home loans, investment property loans have grown by 37 percent over the last four years. By contrast, the number of owner-occupied loans grew by a much smaller 4 percent in this same period. 

Perhaps you’re champing at the bit to get in on the action yourself. But before you do, be sure you know why you want to do it and what you are hoping to get out of it.

You can earn a return in different ways

The most common way that people think about property investment is that you buy a house, let it sit, and some years later if home prices in the area have risen, then you’re due to sell it for a potential profit. This is what’s known as capital gains. But it’s not the only way to get a return on your investment. You can also start renting your new acquisition out to tenants and charge them rent, which could help cover the costs of insurance, mortgage repayments and basic maintenance – or if you’re lucky, even provide you with some extra cash in your pocket each week.

Alternatively, if you’ve got a mind for business, commercial property investment is another avenue that can be explored. While it is not as well-known as residential property investment, with a bit of knowledge and guidance, you could find yourself successfully adding an office, retail outlet or industrial property to your investment portfolio. There are plenty of real estate agents who specialise in commercial property, and even some online commercial property platforms, such as Corporaterealestate.com, who will help you buy, sell, manage and find tenants for your new commerical investment.

You obtain a valuable asset

Saving enough money for retirement can be a difficult thing to do. But one avenue that some people choose to take is buying a property – for residential or investment purposes. When you buy a home, you’ll be making payments to your mortgage each week or month. As a result of doing this, you’ll build up equity in your loan over your life and gradually pay it off altogether. Once this is all done and dusted, you can own your home outright, giving you the power to sell it in the future and put the funds toward retirement. 

Industry Communications Director of Roy Morgan Research Norman Morris noted that government policy towards retirees could be significant in pushing individuals to consider this option.

“Older Australians will face the prospect of cuts to pensions, and with the proposal for the pension age being increased to 70, this could impact the investment property market,” he said.

You have some control over the process

Unlike with other investments, you as the investor have some agency in whether or not your property might see growth in value. By keeping the property maintained, along with making improvements and additions – perhaps a new paint job, a more tidy yard or some modern appliances – you could help drive up its value. If you wanted to be bolder, adding features like a garage or extra bedroom can potentially have an even more significant impact on the price.

Certainly, there are risks with property as there are with any investment. It is not a “liquid” investment, as it’s not possible to withdraw it quickly. And there’s always the chance you could be left selling the property at a disadvantageous time or spending too much to hold onto it. You’ll have to weigh up whether the costs and benefits are suitable for both your overall goals and your financial circumstances.

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