No one can deny that real estate is a good investment. However, like any investment, you need to research the field before you buy a property. Even if the interest rates are rising, using a sound strategy can reap you dividends.
Commit Yourself to a Long-term Strategy
With prices rising in most markets and a shortage of rental homes, you can still see high returns if you are perspicacious enough. Before making an investment though, you need to commit yourself to a long-term strategy. This way, you can realise a better outcome. The housing market is defined by low, highs, and steady flows, all which are cyclic. Therefore, you need to feel comfortable about what you borrow, and plan your financial goals accordingly.
For example, if you are interested in securing a rental property, look at the property’s history. Some properties have long and steady tenants, while others do not have this type of stability. That means investing in a rental property requires an adequate cash flow. That way, you will have enough money to cover any outgoings, besides the financing. This is important to keep in mind, particularly if your property stands empty for any period of time.
How Your Investment Can Impact What You Pay in Taxes
You also want to keep one important fact in mind: any repair or maintenance costs, plus interest, can be deducted on your taxes. Therefore, you can make use of either positive or negative gearing. For instance, positive gearing means your annual rental income is higher than your costs and loan repayments. While you will earn additional income, it also is taxed. In addition, you need to include the capital gains tax if you decide to sell the property.
According to Prudential Real Estate specialists, negative gearing means that the costs, fees, and repayments for your loan are higher than the income you’ve received in rentals. When this occurs, you can offset your net loss against any earned income. As a result, you can lower the tax that is payable on the other income.
The two examples mentioned above show why real estate is one investment that can assist you in making the most of your tax expenses. In order to take control of your investment objectives, it pays to be informed about the various facets involved in this type of investment. Stay current on property trends and values whilst also staying up-to-date on what is happening in your local marketplace.
Work with a Real Estate Professional
In order to find out more about the areas in which you want to invest, it helps to peruse property-related content from real estate research companies. In addition, align yourself with a real estate salesperson who is well-versed in the local landscape.
By working with a salesperson, you can obtain more information about an area’s median rental yields and what is planned for a community’s infrastructure. In addition, a salesperson can clue you in on the price growth for specific properties. When you invest the time to learn more about your real estate market, you will also realise larger future returns.