INVESTMENT PROPERTIES TO RENT – ARE THEY A GOOD IDEA?
“The best investment on earth is earth” (Louis Glickman – widely known real estate developer and philanthropist).
Everyone has something to say about the property market.
But if you’re seriously considering buying property, and specifically a property for rent, you should be doing some talking yourself….In other words, you should be asking a lot of questions before you make a move
No-one can dispute the value of buying an investment properties to rent, Perth company, Complete Property Management says, and it is often touted as one of the best investments a person can make. However, a loud voice of caution…. while there are many stories of happy investors, there are also many stories of people whose lives have been destroyed by bad investment decisions.
Many people prefer investing in bricks and mortar as opposed to the stock market because it’s a tangible investment – because they can see it, and feel it, it gives them a greater sense of security. However, just because the actual house is solid, it doesn’t mean that the investment is impervious.
But let’s first take a look at the upside of buying a rental property.
A house for rent is a tangible asset, meaning it has potential to increase in value (appreciate) as time passes, it can produce regular income through the rental payments, it can be purchased using borrowed funds thereby enabling the buyer to leverage their capital effectively and there may be tax advantages too.
Some of the downsides of owning a rental include having bad tenants who mistreat your asset and who don’t pay their rent (cost of recovering the money), increasing interest rates, vacant rental, unexpected major costs to repair the house for rent and potential liability for anything that happens to the tenant whilst they are in your property. Another thing to consider is the cyclical nature of real estate…yes, it goes up but it also goes down as many people with rental property in Perth, Australia, are finding out the hard way. Property there is on a sustained downward trend, and many people have been forced to sell their Perth rent homes at a substantial loss.
The trick with any investment is to minimize the disadvantages and to maximise the advantages – and the same is true when it comes to buying rental properties.