Owning a home has long been the great Australian dream, but there is more opportunity in the property market than just purchasing a house to live in. Many Australians invest in real estate for capital gains and regular income.
This article highlights the benefits of residential property investment in Melbourne, highlighting why you should invest, how to overcome common challenges, and how we help simplify the process with tailored financing strategies.
- Why Invest in Residential Property?
- Overcoming Common Challenges in Property Investment
- How Lend & Co Simplifies Residential Property Investment
Why invest in residential property?
1. Consistent income source
As there is a constant demand for housing in Melbourne, residential property is a popular investment. Investments create the potential for consistent rental income, establishing stable sources of cash flow. A solid economy also provides investors with a reliable way to achieve long-term capital growth as investment properties appreciate.
2. Tax advantages
There are several tax deductions available to Aussie property investors. For instance, you can claim the interest on home loans as a tax deduction. Management costs, such as property agent fees, land tax, and property maintenance costs (cleaning, repairs, insurance) are also tax deductible.
Negative gearing is another well-known tax benefit. This occurs when the cost of managing and owning a rental property is higher than the income it generates. Investors can offset this loss against other income, such as a salary from employment, or other profitable investment properties.
3. Wealth building
As you build your property portfolio, this increases the amount of rental income every month. You can then reinvest this money to purchase more properties. Over time, this process leads to wealth building.
Another example is liquidating one or more of your investment properties after they increase in value. Quick capital gains provide cash flow that you can either reinvest in an area experiencing growth, use the money to enhance your lifestyle, or seek out other investment opportunities to grow your income. You will be liable for paying capital gains tax though, so you do need to speak to your accountant for professional advice on minimising capital gains tax, if possible.
Overcoming common challenges in property investment
While there are significant opportunities in property investment, there are also common challenges for investors to overcome. For instance, one of the greatest hurdles can be securing finance, particularly during times of fluctuating interest rates and strict lending criteria. You need a strong credit history, a stable income, and a substantial deposit.
To overcome this hurdle, compare loan options, work with a mortgage broker, or explore alternative financing options such as joint ventures or leveraging equity.
Navigating the Australian property market also presents a challenge. Prices and demand can vary across different areas and cities. Infrastructure developments and economic conditions can all have an impact on property values and rental income.
To counteract this, conduct thorough market research, stay abreast of current market trends, and seek professional advice from industry experts. Combined, these strategies help you make well-informed decisions. Understanding local demand and identifying high-growth areas also culminates in a maximum return on investment and minimises risk.
It’s vital that you manage your cash flow, as this is a critical element of successful property investment. Unexpected events, long vacancies, and interest rate changes all impact profitability.
Smart budgeting, maintaining a financial buffer, and keeping track of expenses and income are all vital for long-term financial stability. Hiring a property manager can streamline your rent roll, thus reducing the burden.
If you address these common challenges with careful planning and expert guidance, you can build a successful investment property portfolio.
How Lend & Co simplifies residential property investment
Here at Lend & Co, we help property investors by providing you with resources, the right advice, and tools to help you make informed decisions before committing to a property purchase.
A. Resources
For instance, you can access our blogs/resources page which offers current and timely advice on everything to do with Australian real estate, including applying for home loans, using your home equity, market trends, and more.
B. Calculators
Take advantage of our handy calculators. There is a calculator for just about everything. Want to know how much you can borrow? Use the Borrowing Power Calculator. Want to know what your loan repayments will be? Try our Loan Repayment Calculator. We also have calculators for working out stamp duty, income tax calculators, and more.
C. Expert advice
Our expert and experienced team also help simplify residential property investment, and you can start by booking a free strategy call. We tailor financial solutions and empower investors to build wealth through real estate with confidence.
Start your property investment journey today
We’re here to help you every step of the way on your property investment in Melbourne. Contact Lend & Co today for personalised advice and support in achieving your investment goals and dreams. Book a free strategy call.
