FIND YOUR FIT
IS OWNING PROPERTY RIGHT FOR YOU?
Residential property continues to be one of the most popular investments for Australians but there are many things to consider to ensure that property is the right investment choice for you.
ME Bank head of home loans Patrick Nolan has a number of key issues to consider when deciding to invest in the property market.
Mr Nolan said to think carefully about why you want to invest in property.
“A quality property could be an excellent long-term asset that can help you achieve important personal goals, like building personal wealth or saving for retirement,” he said.
“What are your goals and will a rental property help you achieve them?”
Mr Nolan said property was an investment one should ideally be prepared to hold on to for five or more years for the property to rise in value and to recoup transaction costs.
“This long-term approach means a rental property should fit your lifestyle — not just today but further down the track also,” he said.
“You don’t want to be in a position where a change in work or lifestyle means you have to sell the place prematurely and potentially cut short any profits on sale.”
Buying a property usually involves taking out an investment loan.
Interest can usually be claimed on tax, which helps to reduce costs, but Mr Nolan said to be sure to crunch the numbers to see how your cashflow can be affected by any possible future interest rate rises and periods of potential vacancy.
“You may not be able to raise the rent immediately following an increase in the loan rate,” he said.
There are various issues to consider.