There are a lot of people giving advice to property investors. Some advocate positive gearing while some say negative gearing is the best route. Some live and die by the long term and some by the short term. Since every investor’s situation is different, there really isn’t a “one size fits all” solution to property investing and it angers me to see marketing companies and other real estate agents forcing a round peg to fit a square hole. But there are definitely some myths that could use clearing up.
There is Too Much Competition
We will agree that there are a lot more people investing in Perth property now than there used to be 2-3 years ago. Between an improving financial outlook, tax incentives and a growing number of international investors, the Perth investment market has become quite lively.
However, the number of people who actually become property investors is still comparatively small and the number of people who develop impressive portfolios is even smaller. There is still plenty of property and plenty of money for those who want to invest.
It Costs Too Much Money
While it does cost a substantial amount of money to invest in property, there are plenty of investors who build a substantial portfolio while earning an “average” income. Many use their savings for their first down payment, team up with someone else or leverage the equity in their residence to get together a deposit for an investment property.
All Property Prices Rise
In the Perth market, this would seem to be true, but even here, there are properties that stagnate or even fall in value. It is essential to seek the advice of a property investing expert before choosing an investment property.
You Should Always Negative Gear
Negative gearing works for people who want to decrease their tax burden due to other investments. However, for the small real estate investor, negative gearing can become problematic especially if you go long periods without getting capital growth. By building a positive cash flow property portfolio, over time you will be able to replace your income and decide how much to work.
Debt is Always Bad
Debt that costs you money can be bad, but debt that is making you money, such as the loan for a profitable investment property, is good.
If It isn’t in the CBD, It isn’t Worth Buying
We love Perth CBD properties at certain times in our growth cycle, but all indicators are pointing to suburban properties being set for strong growth in 2014. A property in a suburb primed for capital growth can be more profitable than a mediocre property in the Perth CBD, wherever you choose to invest it is very important to get the timing right.
Investors Edge can help. Please call: 1300 472 427.
