Investing in property .. is it for you?

Record low interest rates have resulted in more people looking at property as an investment option.  Country towns such as Naracoorte can be seen as attractive options, with a growing migrant population gaining employment in vineyards and meat processing businesses.  According to the Real Estate Institute of South Australia, Naracoorte is still a very affordable town, with the median house price for the December 2014 quarter sitting at $258,500.

Cynthia James-Martin from Ottoson Partners Real Estate said those wanting to buy an investment property will find the rental market very healthy, with landlords benefitting from low vacancy rates. “On average, homes are vacant for only around a week, which is great for landlords. Landlords don’t love me if I haven’t got their properties tenanted.” Ms James-Martin said there is a broad range of people looking to rent a home. “It’s people who have relocated for work, it’s younger people who are wanting to move out of home, it’s meatworkers who have come from overseas, it’s quite a mix of people. The meatworks has been a huge boom I think to the local community because they employ some 600 people.” According to Ms James-Martin, certain types of homes are more attractive for those looking for a rental. “I think I would look for 3 bedrooms, at least one bathroom, preferably two but the price of the home would increase.  I’d be looking for a  reasonably small quarter acre yard that was developed, neat and tidy preferably with a sprinkler system that would make it fairly low maintenance, and a home that was attractive to look at.”

Paula Gust from Accounting firm Murray Nankivell said there are tax benefits when buying an investment property, including depreciation, deductions on loan interest and deductible expenses when it comes to tax time. Those deductible expenses include replacing items that have broken, for example, a new hot water system. There are also letting, inspection and monthly management fees which are calculated at a percentage of the rental income, all of which are deductible. Ms Gust said, contrary to what some people may think, you don’t have to be wealthy to have an investment property. “However you do need a steady income and savings to get started, and make sure you don’t borrow more than you can afford to pay back.  Usually the rent doesn’t cover all of the repayments, so keep this in mind when crunching numbers.”  Having an investment you can physically ‘touch’ carries the emotional sense of stability. “In tough times, usually homeowners don’t rush to sell the property – unlike shareholders who rush to sell down shares.  There’s the additional layer of safety as you can insure the property against fire, damage, and more.” AAnother featureof an investment property is  the ability to use its value without having to sell it. “This opens the door to the ability to invest in other properties as the value of the property increases, helping you to grow your portfolio.” said Ms Gust.

Ms James-Martin from Ottoson Partners Real Estate says finding the right Property Manager is a must. “You need to be able to trust your Property Manager, know that they are working for you, and will look after your property as if it were their own. Landlords don’t like their properties being vacant, and neither do we.”