REAL ESTATE EXPERTS’ TIPS
THERE are many benefits to investing in bricks and mortar – it is something you can see and touch; it tends to be less volatile than shares; and you can take out a straight-forward loan to fund the purchase. There can be attractive tax benefits, too.
It sounds like a compelling case, but when mistakes are made, property investment can become a bumpy ride. Be- fore you take your next step in your property journey, it is important to consider your options around your home loan and tax structure, as well as what your financial goals are and whether you should enlist the help of a property manager. Capital growth vs rental yield THE potential revenue from investing in property is two-fold; firstly, there is the rental yield generated from having a tenant. Secondly, your property will be ideally increasing in value over time, creating the opportunity to reinvest your equity or realise a profit when you sell.
Typically, stand-alone homes tend to provide better long-term capital growth, while units require less initial investment and can generate higher return.
Hegney Property Group founding di- rector Gavin Hegney said the “sweet spot” between the two was usually found in homes 40 to 50 years old, with about 70 per cent of the value tied up in the land and a rental yield of around 4 per cent.
“You want a location where you have what I call ‘the multiplier effect’,” he added. “This comes from redevelopment, rezoning or beautification of an area.”
Mr Hegney, a and valuation expert, added: “Smart investing is always about buying something that has a good reason to go up in value.
“Talk to the local council’s planning department and find out what’s in the 10 and 20-year plan. If you can’t show me why it’s going to go up in value, you shouldn’t buy it.”
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