REIF's FAQ: Property Investing Edition
Updated: May 20, 2022
It doesn't matter if you're new to property investing or have decades of property investment experience; real estate constantly evolves. As specialists in real estate investing, we can appreciate the fact that there's always so much to learn.
In this article we're going to share our answers to our most frequently asked property investment related questions. To give you the most up-to-date and relevant information, we've consulted our expert team of Property Investment Specialists who have decades of industry knowledge to help answer these questions.
Q: Is it better to invest in new or established investment property?
A: Here at REIF, we are advocates for investing in new property. There are four reasons why new property is our strategy of choice, and they are:
New properties allow you to maximise on depreciation through tax and therefore increases your cashflow
New investment properties attract greater tenant appeal. As a property investor, you want to know that your property is being occupied by higher quality tenants
Warranty and maintenance purposes. New properties have anywhere between 7-20 years builders warranty. This means that if anything defaults in this time period, the builder is liable for repairing or replacing it. New properties also have a decreased risk of incurring any maintenance issues
Government incentives. As an property investor, when you purchase a brand new house and land package, you only need to pay stamp duty on the land. If you're buying an established property, you need to pay stamp duty on both the house and land.
Q: How do I know if an area is going to increase in value and provide me with capital growth potential?
A: While you cannot predict for certain that an area will increase in value, there are a few factors that can influence the potential for capital growth. It all comes down to supply and demand. If there's high demand for property and a shortage of supply, this pushes house prices up. Factors that influence demand include:
High infrastructure developments within the location
Transport connections and public transport
Areas with employment opportunities
Local amenities (education, childcare, retail, restaurants, recreation, healthcare etc.)
Q: Is it better to invest in shares or property from a long term perspective?
A: While there's no clear-cut answer, here at REIF, our preferred investment strategy is real estate. The shares market is constantly fluctuating. While you may see higher growth for your dollar one day, it can quickly turn south the next. Whereas, real estate is more steady and generally increases over time. Banks are also more likely to allow you to leverage and borrow at a higher capacity with property, rather than stocks.
Q: How can you diversify as a real estate investor?
A: As a property investor, it's always a good idea to invest in a range of different properties across various locations. This lowers the risk of your portfolio underperforming. As an investor, you can also diversify by investing in properties that utilise various investment strategies, i.e. rental properties that focus on generating positive cash-flow or properties that focus on capital growth potential.
Q: Is it better to manage your own investment property or should you hire a property manager?
A: We cannot stress the importance of hiring someone to manage your rental property enough! Property managers are trained in sourcing quality tenants. They can also chase missing rental repayments in an ethical manner (when required). They will also manage rental legalities, any maintenance issues, and free up your time having to worry about your investment property.
As a property investor, the last thing you want is to deal with the stress and let the management of your rental consume your time. Property managers can do all the hard work for you. If you're in need of a good property manager to look after your investment property, please reach out on the details listed at the end of this article.
Real estate investing is a long game. It's ideal to have a supportive team with a diverse range of expertise to assist you on your journey. If you're looking to invest in real estate, whether it's your first or tenth property - REIF can help! To book an appointment with a specialist, click the button below. Alternatively, if you have any other questions, feel free to give us a call or email on the details provided. We look forward to assisting you in any way that we can!
Ph: 1300 130 932