The Property Investor – Rewards and Risks

Do you want to achieve long term wealth? If you do, then you need to become “the property investor”. The industry offers certain rewards but it also comes with certain risks. By investing on real estate properties, you can get reasonable returns. With the secured investment, you have many things to gain. Once you’ve secured a property, you can add value to it by making improvement or renovations. If you plan to rent out the property, you can expect good returns since the rental prices are usually going up. Over a period of time, you can also expect capital growth since properties tend to increase in value after 10 to 20 years.

Depreciation allowance, agent fees, land tax, insurance, and property repairs can be claimed as tax deductions. As the property investor, you can enjoy these benefits and not only that, you can also do negative gearing to receive certain tax advantages. To ensure long term wealth, you need to hold on to a property for 7 – 10 years. This is the time when you can see your investment doubling. Aside from the rewards, there are also risks that you can be aware of. Investment decisions are vital and you have to make sure that yours is an informed decision.

When there is low risk, there is an also low return. When you purchase a certain property, you will also be charged of GST and stamp duty. The GST is charged on maintenance, repairs, agent fees, home construction, and renovations. When investment properties appreciate, the government will also charge you with capital gains tax.

In the case of being a landlord, tenant vacancies can be a big problem so you have to ensure that you have a steady flow of tenants. Properties should be maintained and so you will also incur costs. Before buying a building, always make sure that appropriate building inspection is carried out. Are you into purchasing strata units? If so, then you will be required to pay certain levies on the property. As the property investor, you need to check if there are upcoming levies on the real estate property you’ve bought.

If the property is located in a peaceful area, it would be wise to think ahead and determine if future projects are underway like airport construction, or perhaps freeways. In some states, land tax can be applied to the properties.

These are the rewards and risks that should be familiar when investing in the real estate industry.