Investment in residential properties is a good choice for many first time investors, willing to make a change in their life. Any individual wishing to improve their chances for a secure financial future, and looking for good opportunities in the sector, can invest in a residential property.
Buying a residential property, in a suitable neighborhood opens up chances of earning a good return on investment. It can either be by means of selling the property for an increased price on the market by adding value to the property, or by putting it up for rent to interested individuals.
While renovating a house and selling the property for profit on the market is a choice investment activity for many, others prefer a steady source of regular income. Some real estate investors opt to invest in the sector, to earn a passive income. And renting out the properties helps earn steady income, helping them meet their everyday needs.
So while selling the property is an investment hobby of many, others prefer to enjoy a continuous stream of money, which serves as their backup for a rainy day. The advantage of renting out properties on good rents is that it helps investors earn good money every month, and they can also sell the residential property whenever they wish to.
This way they earn double benefits from their investment! Many a time, the worth of a property increases with the passage of time, as the market dynamics improve gradually. That is why, many experienced investors, purchase a property, put it up for rent and then wait for the property price to rise in the market. As soon as the property values reach a good prospect level, these investors sell them in the market.
The issue of rental returns, negative gearing and similar such schemes depend very much on the taxation laws of the time and how the investment property is financed. If the investor intends to borrow then the numbers will be quite different as it is more likely that for the first couple of years the rent received will not completely cover the costs of holding the property is there is a mortgage. The good things is the amount owed stays the same but rents historically slowly rise each year.
Renting out properties is sometimes a much better choice than selling them, because the market is not always conducive for property trading. The property needs to be put on the market after an assurance that it will fetch a good value in the real estate market, and that might take time. Sometimes a certain type of property or locality is in vogue and preferred by the buyers, which helps fetch a good price for a property. But until that opportune day comes, renting it out on a good price is the best option.
So if you are a first time investor, buying and renting out a residential property might just be the best available option. You will get to earn a regular income, while you wait for the best offer on the market. Who knows, you might even become an expert investor, who rents properties to ensure a secure financial future for their family.
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Toni Planinsek, principal of Planinsek Property Group, is happy to answer any queries through social media - Facebook and LinkedIn. She has prepared some free offers to help you on your road to becoming a successful property investor. To access yours go to www.toniplaninsek.com.au