With a lot more information being over loaded on the internet about property investment available, it could here turn out to be difficult for budding investors to separate the facts from fiction. Some of the lessons are learnt during the job where as some from our own experiences. They are lessons that cannot be forgotten. However if you can avoid mistakes in the beginning itself, you would here step aside a lot of heartache and financial loss potentially bringing your investment dreams to a grinding halt.
Buying your own home first: Owning your own home was generally considered to be a norm in most of the countries, but not anymore. Today your top priority here should not be paying off the mortgage loan on the principle place of residence, as the home loan generally weakens the serviceability with the mortgage lenders. And unlike in a mortgage investment loan it turns out to increase the cost of living without earning income. More often than not investing in a property you would here have to live in an area that is below your expectations. Typically it would here cost you more than to buy your home than to rent out while using your capital to invest.
It is the land that increases the value so houses make better investments: Again not all lands are equally created. There are millions of hectares of land in Australia that would not just rise in the value just because nobody would want to live there. With the economic growth, job growth and wages growth tend to occur closer to the CBD apartments in the inner and middle suburbs of our capital cities, increasing the value more than the houses being surrounded by the suburban block of land in the outer suburbs.
You need to invest a lot of money in order to get started: Just because you are a property investor friend who has a lot of cash, it does not mean that he or she started out that way. Purchasing a house full on block certainly would cost a lot, starting with much smaller investments such as the townhouses, units and apartments. So when you start earning income from these investments you would have more money to finance the others. On top of that if you pick up the right asset at the right place and time the property would then appreciate in a few year’s time translating to more of equity funding your next purchase.
Investing in a property in order to reduce the tax: One of the most important reason to make an investment in a property is to create wealth and not minimize your expenses. Negative gearing a property is considered to be worthwhile only when you are confident that the average annual capital would gain an out weight of the total purchase cost. The tax benefit while the expenses turn out to be bigger than the income and have to pay the taxman where the gearing turns out to be positive achieving a capital gain on the sale. So try and invest for wealth and if you use negative gearing then do make sure that you buy in an area with the stronger prospects of the long term growth.
To conclude it can be difficult for you to decide which specific property you could make an investment in. Before pushing the notion away bear in mind that many of the reasons against this are just myths and nothing else. Investing in a property can bring in good returns although it would take enough time to make profit. So what more would you like to add to the blog above? Do leave your answers in the comments section below.
Ankita Aggrawal is a business architect in real estate industry. She has 5 years of experience and she has got knowledge about various real estate projects including commercial properties,Residential properties,bunglows,flats or Villas in Vidyanagar Bangalore.