When it comes to investing in property, it’s wise to be familiar with as many approaches as you can.
Armed with a few different ways of going about it, you can hopefully choose the best option that suits you and maximise returns as a result.
According to Your Investment Property magazine, you can narrow the most popular and well-travelled property investment paths down to a top five.
1. Negative Gearing
Most people have heard of the term negative gearing and it’s a very popular investment strategy in Australia. A property is negatively geared if the costs of owning it are higher than the rental returns it attracts. Tax breaks allow this financial loss to be offset against income tax liability, which in turns help to cover the costs of owning the investment property.
2. Positive Gearing
Positively geared investment properties are those where the rental returns are higher than the costs of owning them, and as a result put cash flow profit in the pocket of the investor each month.
These properties make investors attractive borrowers to banks and can boost the amount you can borrow. The monthly profits can also offset any losses investors may carry on other negatively geared properties they own.
3. Flipping
Flipping is another popular investment strategy in Australia, driven largely by the high prices you can get for liveable homes close to major cities. Investors who flip property buy run-down houses and renovate them to make them attractive places for people to live, and then sell them for a profit.
The best way to maximise returns when flipping property are usually to get it done as quickly as possible and to keep the renovation costs down as much as possible.
4. Subdivision
Property investors often move onto complex subdivision projects after they have built their confidence and experience over time with previous successful investments.
With a subdivision investment strategy, investors buy a large block of land and divide it into smaller blocks, building two or more separate lots, and then either selling them at a profit or keeping them for rental return and longer-term capital growth.
5. Buy and Hold
The trusty buy and hold of an established house in a good area is well-trodden investment path. The returns you get from capital growth will depend on the house price going up over time so the aim is to choose a home in an area tipped for infrastructure growth, close to amenities or attractive places that tenants would want to live nearby. This investment strategy is best suited to detached houses rather than apartments.
Give the Perry Finance Team a call on 03 9101 8517 to explore further!
