Owning A Rental Property Still High On Bucket Lists

One of the attractions of property investment is that the average person, with just a little knowledge of real estate practices, can understand the principles and processes involved without needing specialized assistance. This is in contrast to other investment vehicles like share, options or futures trading which require constant monitoring of the markets, a reasonable level of understanding of how, when and what to trade, tracking mechanisms to keep control of transactions and some type of accounting system to manage it all. These markets can also be very volatile, requiring regular intervention to maximize profits, while property values, averaged long-term are much more stable.

Does property investments tax take too much of your profit or is it still worth going into property investments? To get the best advice from accountants Bundaberg investors can talk to the professionals at Charter Partners who will go through the pros and cons of property investment with them.

The first decision to be made is whether the property will be a renovator that can be quickly freshened up and sold for a quick profit, or something suitable for immediate rental with a long-term goal of offsetting the mortgage payments with rental income and tax benefits, while creating capital gain.

Since a long-term prospect is, by far, the choice of most people, let us look into its pros and cons. There are several immediate benefits. A rental property will generate income immediately and unless the property or rental market collapses completely it is a stable investment. The property can be acquired with a deposit, and the mortgage payments offset using funds from the rental income, less any expenses for maintenance or property rates etc. Once there is some equity in the property, it can be borrowed against to purchase another asset.

However, money invested in rental property is not liquid, and in an emergency, the state of the market would dictate how quickly the asset could be turned into cash. In cases when there is a large mortgage, the needed income won’t be achieved and the owner would need to use his own money to fund the balance. It also will need maintenance requiring outflows of cash from time to time. To calculate capital gains tax Bundaberg investors should seek out professional advice, and this tax must be paid on any profit when the property is sold. Additional financial burdens include property investment taxes and tenants who either bring damage to properties or don’t pay rent.

Many people have used property to set themselves up financially. The best decision is an informed one, so anyone thinking of starting a property portfolio should gather all the information, research the market so they know what they are buying, check their finance options, then decide if property is for them.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com