Southern Gazette (South Perth) - - Residential - Ce­leste Gorrell-Anstiss

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.”

Con­tin­ued on page 35

David Airey.

Kris­tian Jerom­son.

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