Wednesday 19 June 2019
How Can The Average Australian Invest In Property?
Although you may not realise it, the vast majority of property investors earn average incomes and aren’t backed by significant assets. Many people fall into the trap of thinking that they can’t afford to invest in property, and they therefore fail to take advantage of one of the world’s most productive investment streams.
There are various ways for the average person to get a foot in the door and start investing in property, ranging from rentvesting to purchasing a dual occupancy property to maximise rental return. In this article I’m going to outline these and give you an insight into some of the things that thousands of regular Australians are doing to maximise their wealth.
Dual Occupancy Residences
A dual occupancy property is one where more than one residence is built on the same block of land. This may be in the form of either two separate standalone buildings or townhouses, or one duplex building divided into two living areas. Dual occupancy properties are attractive and common among investors, as they allow rental returns to be maximised.
There are a few different ways to get your hands on a dual occupancy property. The simplest option is to buy a property that already has a duplex or two separate buildings on it. However, the downside of doing this is that you will probably pay a premium, as a lot of other investors are generally interested in dual occupancy properties as well.
Alternatively, you could purchase a house that sits on a large block. As long as council restrictions allow it, you could then build a second home or a granny flat on the block, allowing you to either rent both out or to live in one and rent out the second.
Investing in a dual occupancy property let’s you maximise your rental returns by having two sources of rental income. Alternatively, you can live in one of the residences and rent out the second, using the rental income to help you pay your mortgage.
We spoke to property developer, We Develop, who recommends purchasing a house on a development suitable block in strong capital growth areas so even before your duplex is complete, you land will be steadily growing in value.
The term ‘rentvesting’ is used to refer to cases when a homebuyer or investor can’t afford to buy where they want to, so they purchase a property in a more affordable suburb and rent it out, at the same time renting their own place in the area where they want to live. Rentvesting is becoming increasingly popular among young people and first home buyers, because it gives them a chance to live exactly where they want to while investing in property at the same time.
If you don’t have the financial capacity to invest in a property on your own, you could consider buying shares in a property investment company. Australian real estate investment trusts (A-REITs) usually own a number of commercial and residential properties. You can buy shares in them, and will benefit if and when the value of their properties goes up.
Finally, buying a house to live in can also be seen as some form of investment. Although you won’t benefit from rental income or rental tax deductions, there are other tax benefits. If you sell a home that you have been living in for a set amount of time, you won’t have to pay capital gains tax. It’s still possible for an occupied house to go up in value significantly, paving the way for you to multiply your wealth and start your career as a successful investor.
Anyone Can Do It!
As you should be able to see by now, property investing is not limited to the small fraction of people who are rich enough to purchase land without a mortgage. Almost anyone can buy a first investment property if they have a small deposit and a steady job. Do some research, figure out a plan of attack and get out there and buy your first investment property!
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