With so many factors affecting the real estate industry at the moment, a decision to buy an investment property might seem a little bold. However, there are some considerations that must be taken into account if you’re thinking of taking the plunge and investing in property.
Many predicted that 2022 would be a bumper year for real estate investors at the beginning of the year. The borders were open, there was a genuine demand for more rental properties, and an increase in the family home’s worth that meant many were ready to explore a move to a larger property.
These points are still valid; however, there have been some unexpected circumstances that need to be considered.
While Covid has seemingly taken a backseat and is no longer front page news, no one had predicted the war in Ukraine would have such a global impact. Likewise, a change in State and Federal Government, a recent hike in base rates by the Reserve Bank of Australia, and sharp rises in the overall cost of living have meant many of us have had to reconsider our family finances.
Does that mean the idea of buying an investment property should be parked right now?
Not necessarily.
Let’s take a step back and look at the overall property investment picture.
So, is real estate actually a good investment?
Investing in property is a big decision. We’re not talking loose change here: there’s serious money involved. That’s why knowing what makes a good investment property is critical.
Despite what’s happening around the country and the rest of the world, property rates have skyrocketed of late. While there are signs of it slowing down and starting to ease in the eastern states, SA prices are still high across the board.
So, how do you decide if a property is a good investment? Here are some factors that may influence your decision to buy.
Investment portfolio diversification: Real Estate can provide a buffer against stock market volatility.
Performance: From an inflation viewpoint, Real Estate has been shown to outperform other investments, such as stocks and bonds.
Income generation: Investing in Real Estate not only generates capital appreciation but can also create cash flow by providing you with a potential source of passive income.
Tax savings: Property offers several tax benefits, such as deducting mortgage interest and property taxes.
Equity: As the equity in your investment property builds, it can be used to secure another property or collateral for a home equity loan.
Is buying an investment property the right decision for you?
Sometimes, as the adage goes, ‘we can’t see the trees for the forest’. And while the market might seem attractive at the moment, are you in a good financial position to take the next big step?
The right time to buy an investment property largely depends on personal circumstances. Financials aside, personal and emotional considerations also need to be taken into account.
So, what’s your investment checklist look like? If they’re not already at the top, here are some things that should be.
- Are you financially viable to take on an investment property?
- What type of property are you looking at? Residential, commercial, apartment/multi-family dwellings, holiday rentals, or a fixer-upper?
- What about location? Where are the best value suburbs? Are you looking to invest here or interstate?
- What are your expectations in terms of income?
- Have you considered the property management side of your investment property? Have you looked into your responsibilities of becoming a landlord?
- Have you consulted with a respected real estate agent and discussed the pros and cons of getting into the investment property market right now?
South Australia’s property market has been relatively solid for the past couple of years and is tipped to stay strong. If your ducks are in a row and taking else everything into consideration, 2022 could be a good year for you to invest in property.
Talk to the professional team at McGrath Real Estate Group. They can help you find the right investment property to suit your needs and take care of the management of your new property for you as well.
Phone our office on 8350 4200, drop into 42 Brighton Road, Glenelg.