Are you ready to in­vest in prop­erty?

Mercury (Hobart) - Property - - Front Page - AN­THONY KEANE

OUR­real es­tate sec­tor is look­ing in bet­ter shape than it was a year ago, ex­perts are say­ing.

That doesn’t mean the good times are back – it just means the mar­ket is not the bucket of slop it was last spring.

Prop­erty in­vestors, hav­ing watched real es­tate val­ues fall in re­cent years some­times to be­low their pur­chase price, are un­der­stand­ably ner­vous about jump­ing in.

Whether you’re an ex­pe­ri­enced in­vestor or a first-timer, here are five key ques­tions you need to ask your­self be­fore tak­ing the plunge on prop­erty.

I han­dle a house price crash? Ex­perts – even those at our es­teemed Re­serve Bank – don’t ex­pect our real es­tate mar­ket to suf­fer the big falls felt in Europe and the US, but that doesn’t mean it won’t hap­pen. Think abouthow you would re­act if your in­vest­ment was worth 20 to 30 per cent less than your mort­gage on it. This will help you re­alise if you’re ready.

Do I want growth or in­come? This will de­pend on your life stage. Older real es­tate in­vestors of­ten use rental prop­erty in­come to help fund their re­tire­ment, while young­sters tend to be more fo­cused on cap­i­tal growth. Prop­er­ties in outer sub­urbs and re­gional ar­eas tend to of­fer lower cap­i­tal growth and higher in­come than in­ner-city ar­eas, but be­fore buy­ing any­where make sure you’ve done your re­search.

What’smyPlanBif dis­as­ter strikes? If your ten­ants do a run­ner, you can’t at­tract ten­ants, you lose your job or in­ter­est rates soar to lev­els you can­not af­ford, howwill you cope? In­vestors need to think about such worstcase sce­nar­ios be­fore buy­ing, to make sure they have other sources of in­come to cover the prob­lems and pre­vent a forced sale.

What are all the costs? Don’t just crunch the num­bers on in­ter­est rates – you’re go­ing to have to pay other bor­row­ing costs, coun­cil rates, in­sur­ance, land tax, re­pairs and main­te­nance, pos­si­bly prop­erty man­age­ment fees, and more. You don’t get all these costs re­funded at tax time, only about 30 to 40 per cent for most in­vestors, so make sure it still makes fi­nan­cial sense.

What’smyexit plan? Any­one en­ter­ing any

FIRE SALE: Have a plan B ready.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.