Benefits of Buying Investment Property in Australia
When you put money in an investment or venture, you would want to have the assurance of having robust returns. After all, entrepreneurs do not gamble just to lose the bet. They want to know they will earn in the future from their investment today.
One of the safest bets for investment, at least in Australia, is investment property. There are many benefits of buying investment property in this country because its real estate market is booming and continuously growing. Investors in Australian property market enjoy healthy earnings from rentals. If you are in the property buy-sell business in Australia, you would earn more with property value appreciation.
But what is an investment property exactly? It is a piece of real estate bought for the purpose of earning a return on investment through the following ways:
- generating income from short-term or long-term rental income
- raking in profits from resale of the property in the future
- both methods
Essentially, investment properties are not intended as a primary residence. Some investors are flipping these properties—or improving through remodeling and renovating—to be sold at a profit.
With this, let us discuss the benefits of buying investment property in Australia. You might be convinced to place your money in this venture after reading this.
Investment Property is a Tangible Asset
Tangible assets mean they are physical and something that could be touched, making them easier to research and understand. At the same time, tangible assets are usually less volatile compared to other investments, making the risks lower as well. Lower risks essentially mean less worries for your part as an investor.
In addition, banks and financial institutions are knowledgeable about property and can assist you if you need financial assistance. They have established a standard process for this already.
Availing Tax Perks
This is probably one of the best benefits of buying investment property in Australia. Some of the costs related to owning such a property may be a tax deductible. These include the following:
- advertising for tenants
- fees paid on your loan
- maintenance
- other related costs
Should the property investor register a net loss, the said amount could be applied as a tax deduction as well. Net loss happens when the expenses for the investment property exceed the generated income.
Generating Profits from Long-Term Returns
An investment property can give you long-term returns if the property value increases through the years. At the same time, you can also possibly earn a regular rental income from the property before eventually selling it. With this, you have to study the following factors:
- Capital Growth. The rate at which property value is anticipated to increase, which can be based on annual computation.
- Rental Property Income. Look at the current rental income and evaluate if there is a possibility of the price to increase over time.
- Ongoing Expenses. These include maintenance costs, insurance, and property management fees, among others.
Meanwhile, having a positive gearing can also be your long-term goal. It is a situation when the property income surpasses the expenses. In short, you earn profits from the investment.
Securing Equity in Your Investment Property
Equity is computed by deducting the borrowings you incurred for the investment property from the current property market value.
For example, let us consider these factors: the value of your investment property according to market estimates is $900,000 and you have a related outstanding debt of $200,000. This means you have an equity amounting to $700,000.
This equity can be used to secure another borrowing should you want to further your investment. You may opt to renovate or buy another investment property.
If you want to learn more about business takeover, reach out to Easy Buy Sell Business Australia. We are a business for sales portal ready to guide you regarding buy sell business in Australia.
