Owning an investment property may be one of the many pies in which you would like to dip your fingers in, but do you know what type of investment property will be suitable for you? With so many options on the property market to invest in, knowing the types of property and the responsibilities that come with it can help you decide if it is suitable for you.
Working what you have
There may be 2.03 million property investors in Australia owning on average 1.28 investment properties per investor, but there are not many Australians who have enough startup capital to own an investment property. For people who are looking for a way to set a foot in the investment property sector could consider carrying out a renovation project. Carrying out a renovation project can be a good investment in the long run when it comes to selling your house. Always keep in mind to call in the professionals when its necessary to ensure that you do not do more harm than good to your property.
Commercial property investor
When it comes to investing in commercial property, which can be done through a business or an investment group, it is vital that you asses all factors. This means looking for a property that has a good return on investment, and the risks that come with it. This means conducting market research to see how properties around the building you are interested in are performing to get an idea of where it is headed. You may also want to check how it will affect your finances.
Residential property investor
People who are interested in investing in residential property are people who are looking to purchase a secondary property in which they are planning on renting out. Before taking the official leap when it comes to investing in residential property means looking beyond the purchase price. This means checking the ongoing cost such as council rates, insurances, rental management, legal fees, maintenance, and other expenses that come with investing in such properties.
In the end, your finances will determine what type of investment property will be right for you. There are common investment property mistakes to avoid, but it is vital that you speak to a financial advisor to know what will be suitable for you. According to ATO, 2 out of 3 investors were negatively geared or reported a loss on their income. One of the many reasons that investors fail to turn a profit from their investment is not having adequate cash flow to manage their expenses.
Before making the important leap, it is vital to check if you will be able to afford the property in the long run. This can help you avoid biting off more than you can choose when it comes to investing in property.