What Real Estate Should I Invest In?

A property is land, or any building attached to it and it is one of the most important financial investment a person owns. Buying a house for things such as rent and property appreciation can help build your wealth, however, it can be a long-term process. Some of the benefits of investing in property include having a physical asset, it can increase your income and you can receive tax deductions. There are four different types of property a person can invest in such as residential, commercial, industrial and land.

Residential

Residential property is building or reselling houses with the intention to create a home. Its primarily used for people who want to buy homes for their families, however, it can be a great investment strategy. A person can make money through selling and leasing residential properties such as condos, townhouses, unit and vacation homes.

Advantages

  • Tax Benefits

When you earn income through property, you can claim any expenses associated with it. These deductions that come when you own and operate a rental property include insurance, advertising, bank charges, cleaning, council rates and repairs and maintenance.

  • Property Appreciation

When you buy a property in a good area, the longer you have it for the more the property increases in price. This can turn beneficial to you in the long run and you can sell it off for more than you paid for it. It can also be increased by the renovations you make to the house and the improvements to the neighbourhood.

Disadvantages

  • Initial Cost of Purchasing a Property

When you purchase a property the initial cost of buying it can be quite expensive however, there are ways to fund your future investment especially in residential property. Mortgage loans and investment loans are things that can help you in your real estate entrepreneur lifestyle. If you need help securing a loan don’t hesitate to contact ECON Business Solutions for loan help, we specialise in finding finance to help kickstart your investment career.

  • No Guarantee of Tenants

When you rent out a property, these is no guarantee that someone will be living in it and how long it takes to find a tenant. While you have no tenants, it’s your responsibility to pay for any of the property’s needs which means you are losing income.

Commercial Real Estate

Commercial real estate is designated land that a business can run to generate income through renting or running a business such as shopping centres and apartment buildings. If you are struggling to finance your investment, ECON Business Solutions offers help securing a Commercial Investment Loan.

Advantages

  • Stability of income

The way commercial businesses make money is through charging rent for the space or running the business themselves. Whether you are renting or sell goods or services you have a reliable income for the extent of their lease.

  • Exposure to different sectors of the economy

If a person were to rent their property, they would have the opportunity to be exposed to different sectors of the economy. Commercial buildings such as shopping centres and food outlets are also directly impacting the economy and can help build your income.

Disadvantages

  • It takes longer to find a tenant when it becomes vacant

Finding a tenant can become difficult because commercial buildings have longer rental period such as 10 years or more and it’s a specialised area. It also matters the location because if the buildings next to you are vacant there can be less of a chance of finding a tenant.

  • Sensitive to economic condition

If there is a downturn in the economy, it affects how well your business or the renter’s business does. This makes commercial properties susceptible to how well the economy does because it affects the income you receive from your property.

Industrial

An industrial property operates and distribute goods and services in areas such as engineering, technology and researching and development. Types of industrial buildings can be used for different purposes such as production, storage and distribution.

Advantages

  • Higher yields

Investing in an industrial rental property creates higher yields because it’s a large area. Income is created through the use of the property such as renting out the warehouse space or you can invest in a location and generate income through the product.

  • Lower turnover

Having lower turnover rates mean a person there is a stability of income and you can make money more effectively. It brings down the costs of the upkeep of the property and it makes you money by having a constant tenant.

Disadvantages

  • Its hard to stay current

With new technological development it’s difficult for industrial buildings to stay current. There are upgrades that need to be done to keep updated for the existing market such as an increased pressure on WIFI compared to 20 years ago.

  • Environmental considerations

Industrial property come with a lot of environmental concerns such as the pollution in the air from the buildings and the mess the products make. This can cause a problem for the environment and should be a main concern for owners of industrial buildings.

Land

A profitable way to start investing in property is buying land outright. Land is a physical asset that cannot be moved, stole or destroyed however, it can be impacted by the council. It also gives you the opportunity to make a profit because you are able to build upon the property and turn it into what you want to.

Advantages

  • Cost effective

Land is a cheap way to start investing because it is a resource with no cost of production. The land is in a designated area and it comes with natural resources. It doesn’t take a lot of money to get started, however, it can be expensive to build anything on it or difficult to sell.

  • There is less competition for land

There is no competition for buying land because it’s a resource that is everywhere. When you are buying land, you are buying the full experience of building a home, this can be stressful on people and expensive, however, it gives you the opportunity to build a house for your family.

Disadvantages

  • Absence of Income

Because you are just buying land, there is no way to get income. The location will have no building on the land and can be expensive to build. This also means you are losing money because you will be paying taxes and council rates while having no income. 

  • Lack of utilities

When you purchase land, it comes with no utilities such as plumbing because it is empty. This can be less desirable for anyone to want to purchase it and if you were to put utilities in, it would come at an expensive price.

If you would like to read any information about investing, The Australian Securities Investments Commission (ASIC) link is down below, click on it to read more!

https://www.moneysmart.gov.au/investing

Or if you would like to talk to someone about your investment opportunities, come to ECON Business Solutions for a free consultation.

http://www.ecbsolutions.com.au

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