With interest rates at historic lows and no sign of any substantial upward movement in the immediate future, leaving large amounts of cash in bank accounts seems to be a lost opportunity. Prudent investors know this and are always looking to put their capital to work.
Spoilt for Choice
There is no shortage of choice when it comes to deciding what types of investment should be included in an investment portfolio. Shares are always popular, some such as art and antiques. Bitcoin is now a wild card except for those who understand it and there are many other contenders. Then why is it that property investment continues to be one of the most popular options in the country?
Property Investment is Easy to Understand
Perhaps the answer lies in its simplicity. Granted that once you get into the detail some effort and knowledge is required, but generally speaking, all that is involved is finding a property, buying it, handing it over to a property manager who finds a tenant to pay the mortgage, then sitting back and waiting for the equity to build. That is something that most people can readily understand.
Of course, there are some fundamentals that make property more attractive than other investments. Historically, apart from a few downturns such as the 2007-2009 GFC, property in Australia has consistently performed well over time. It is also less volatile than the stock market, for example, and delivers secure, long-term gains.
Generous Tax Deductions Make Property Attractive
Investors with rental properties are also able to take advantage of generous tax deductions which is a considerable part of the appeal, especially for ordinary people. The deductions reduce their taxable income, creating generous tax refunds that they can use, along with the equity in their other properties, to increase their investment portfolios.
Some Investors like to be Hands-on
Many investors also like to have a reasonable amount of control over their investment decisions, which can be difficult in the case of a share portfolio or some other investment type that requires a professional level of competency. Where the investment is residential property, the investor may decide to manage the property themselves, while others prefer to use a property management service. Either way, they can still be involved at whatever level of interest they choose.
This has generally been the experience of our property managers at Bunbury Real Estate. Once the required tenancy documents have been signed, some clients like to be kept fully updated with every issue affecting their properties. Others prefer to review the regular statements we provide and only have contact when something unusual has occurred with their property. We are happy to oblige in either instance.