A passionate property investor for some time, I take a keen interest in the questions and ideas of novice / non-investors and enjoy sharing my advice and experience about property investment.
As discussed last week, the property market has been strong over the last couple of years and it seems that there is an increase in the number of Australians investing in property.
In regards to investors in general, only a small portion venture into property investment and fewer still develop significant portfolios.
When considering investing in property, you need to consider investment strategies that work for you and your personal circumstances and the goals that you want to achieve.
With all this considered, here are few common misconceptions about property investment:
All property values go up!
Unfortunately not all property values go up. There may be historical evidence of growth in the area you are considering purchasing but this should not be relied upon alone as an indicator of future values.
It is recommended that you undertake your own research, due diligence and be aware of the risks if a property decreases in value. These should all be considered as part of your investment strategy.
Debt is bad!
The Australian mindset over many generations is that any debt is bad. The truth is not all debt is bad debt. If debt is used to purchase depreciating assets e.g. holidays, computers, or cars then this would be considered ‘Bad Debt’.
However, if debt is used wisely as part of your investment strategies to purchase appreciating assets e.g property, shares or businesses then this would be considered ‘Good Debt’. Good debt, if used effectively, can assist in achieving your goals faster.
Location, Location, Location!
If you don’t buy a property in or close to the CBD it doesn’t mean that an outer suburb property or regional city property won’t perform. It could be a valuable addition to your portfolio.
Cosmetically and structurally you will be able to improve your property but you can’t change its location.
Therefore you need to consider other factors as part of your investment decision of the location including transport, amenities, desirability to tenants and affordability.
Overall, if property is your desire as an investment strategy, remember to ask questions, ensure your property goals and financials strategies are aligned and seek advice from your accountant, mortgage broker or financial planner.