Providing that you purchase wisely, property is usually an extremely sound investment, since over a long term property invariably rises in value, and even in depressed times rarely decreases.
Interest rates are still relatively low, and there is plenty of property on the market, so now is an excellent time to start looking for property to invest in. What are some of the advantages of investing in real estate?
- There is the prospect of long term residual income from renting out the property while at the same time the market value of the property increases year by year.
- There can be tax benefits through maintenance and insurance costs and depreciation.
- The asset can be passed on to children through an estate in the shape of an inheritance.
- If you do decide to resell there is a permanent reputable and regulated market place.
- Property can be used as security by most lenders.
- Provided you purchase in the right area, there is a steady demand for rental property.
- Historically property has been shown to have a good capital growth performance.
Don’t fall into the trap of purchasing a second property while thinking of yourself living in it. Remember that it is going to be rented out to a third party, so do a little research into the type of tenants you are likely to come across in that area.
Try to purchase in an area that is being or about to be developed so that there is guaranteed capital growth potential. Renters typically like property near to a park or a school, or if at the coast, close to a beach.
The thing to bear in mind when purchasing a second property is that there will be expenses involved. These include the monthly mortgage repayments, repairs and maintenance, and taxes. These can be offset by the monthly rental, which you can increase annually.
If you do not wish to take on the responsibility of repairs and maintenance yourself, you can always have a property manager look after the place for you – most real estate agents will do this for you for a small charge, which they take out of the rental. Work Your Wealth run a series of workshops and seminars that are specifically designed around property investment and are well worth attending.