Property is arguably the least volatile form of investment out there. While stocks and shares fluctuate, an investment property can generate reliable cash flow for years to come, if done right. The benefits of owning investment property don’t stop there – here are the most common rewards within reach of even first-home buyers.
Property Investment is Accessible
While other investment options like foreign trading and shares require a degree of prior knowledge, you don’t need to be a specialist to invest in property. You do, however, need to do your research. The location in which you buy will affect your return on investment, so it’s important to ask these questions of a community:
- Will the area appeal to more than one type of tenant? Consider a community with a range of amenities within easy access, whether it be healthcare for older tenants, to schools for families.
- Will more people be moving to this area in the future?
- What is the average rent price of the area, and how does this compare to vacancy rates, both in the area and in the broader market?
For many first home-buyers, property investment is their leg-up onto the property ladder; more specifically, “rentvesting”. Rentvesting is when an owner rents out their investment property while living in a rental themselves. One third of young Australians say they are looking to invest while renting.
When you build a home, not only are you eligible for the First Home Owner Grant; you can often put down a much smaller deposit, when the affordable upfront cost and typically lower deposit is taken into account for investors. Keep an eye out for other new grants as they come.
Fixed Rental Income
If you plan to put your investment property on the rental market, you’ll earn a steady stream of income which goes straight to your bank account. Depending on the size of your mortgage repayments for the property and the amount you receive in rent, this income could cover some or all of your expenses for the property. Rent tends to increase over time, but your mortgage repayments don’t: it is likely that your cash flow could even improve as time goes on.
Investing in a house and land package, you have the added benefit of the property itself being noticeably more affordable without the location premium you’d pay anywhere else. Bloomdale in Diggers Rest, for example, is an up-and-coming community near Melbourne, Victoria. Providing you the same interconnected lifestyle as in the city, you can purchase an investment property for significantly cheaper while anticipating that in the coming years, more and more people will be hoping to live on the city’s outskirts.
An investment property in a master-planned community is also paid for upfront, in one all-inclusive contract. This lessens any financial surprises down the track, meaning you can ascertain that your rental property will generate a certain amount of return.
Over the last 25 years, this report shows that Australia’s median house value has grown by 412%. With this in mind, investment property represents a significant opportunity for capital growth. You also stand to benefit from capital gain if you ever choose to sell.
The potential gains in equity give you good reason to consider adding on that extra bathroom, or a few extra features to boost your investment property’s value in the market. When building a home, you have even more control over the degree to which you customise, and can work with builders to ensure the investment is to your satisfaction. This in turn can give you greater leverage to borrow more on your home loan, or allow you to charge more for rent.
Property investment has some significant tax benefits. Many of the upfront costs that come with owning a rental property may be tax-deductible. This can include advertising for tenants, property management and council fees, the cost of repairs, and home loan interest.
When you build a brand-new home, you eradicate the need to pay for repairs and maintenance which you may later need to claim on tax. While wear and tear is an area of tax you can claim as an investor, building a home means you can eradicate the hassle of repairs from the start.
The primary benefit of owning investment property is this: you are investing in your future, in a way that has proven stable for years’ worth of home buyers before you. Location will determine a large part of your investment’s success, and so buying in a community such as Bloomdale makes sense.
For the best of country charm, comfort, and contemporary living, as well as the Melbourne CBD just a 30-minute drive away, Bloomdale is the place to be. With a wide choice of block sizes to suit your needs and established facilities at Diggers Rest, you’ll enjoy the convenience of connection from the first moment you enter the community.
At AVID, we create places where people love to belong. To find out more about our developments in New South Wales, Victoria and Queensland and how you can invest in the home of your dreams, contact us today.