#Using Property Investment as an Income
Property investment can be a lucrative pursuit. Many investors have flocked into the real estate and rental market looking for ways to fuel their income, gain quick returns, and thrive financially. All of these things are possible, but only if you do it right. Property investment enables you to earn passive income through residential properties, multi-family properties, commercial properties or generally properties that can be rented out or sold after their value has appreciated.
Indeed, there are many good reasons why people pursue property investment. We examine a few below.
Being a property investor means being your own boss. In a nutshell, you make all the decisions – including choosing which properties to invest in, the tenants who will rent from you, how much rent you’ll charge, and basically, how you want to manage your property.
This is not to say it’s a laidback job. Compared to 8 till 5 jobs, as a property investor and landlord, you’re on the clock 24/7. Whether it’s dealing with your tenants and/or property manager, reading up on the market, managing your finances or scoping out your next investment, you should always be active in pursuing the next stage of your property investment journey.
The most beneficial aspect of this setup is that investing gives you a sense of freedom to make your own decisions. No one else controls you. And this is where your management and financial skills will be put to the test. If you’re confident, investing in properties and taking on the role of a landlord may well become the most profitable risk you’ll ever take.
Investing in real estate is not cheap. There aren’t many of us who have a high enough salary to buy properties on a regular basis, but with focus and a strong savings habit it’s far from impossible. The most common route for investors is purchasing property using a mortgage, with the aim of balancing out the cost of the loan’s interest as the property’s value increases. Although a popular strategy, there are many variables and even with research and due diligence it is best to know that nothing is guaranteed. Property values will eventually increase only under the right conditions at the right time.
Because of the availability of mortgages, obtaining cash to buy properties is not necessary, though it can be easier to generate positive cash follow if you have cash on hand and you’re willing to invest in your own business. Again, it’s all about taking calculated risks.
Owning assets that generate income is always better than those producing expenses. In this case, the tenants’ rent payments will be your main source of property income. Every cent of rental income you receive minus expenses is considered profit. Renting out a property can provide you with monthly income and free up your cash flow allowing you to invest in other places or allow you to utilise it for personal use.
Becoming a rental property owner entitles you to large tax deductions. This can be extremely beneficial as you can write off: interest on your mortgage, interest on credit cards used to make purchases for the property, management fees, insurance, maintenance and repairs, property taxes, and legal fees. The benefits are so great in fact that many investors choose to base their strategy around these tax benefits as part of a Negative Gearing Investment Strategy.
Succeeding in the business requires a certain set of skills and goals There are various factors you should consider when pursuing property investment as income. While property investment is universally considered a great wealth-building strategy, as with any investment it comes with the responsibility to do one’s research and being aware of the risks of entering the market. It’s easy to say, ‘you can earn money from property investment’, but a lot of work is put in before anything happens.
You must keep your goals in mind at every stage of your journey and you need to be clear on what you want to accomplish financially. You should also be mindful of your main source of income and other expenses for you to obtain the right loan to buy your first property, and those which follow it.
Most importantly, you should research properties that provide the most potential for your chosen real estate strategy. Buying a 4-bedroom house in Mango Hill is a very different investment to purchasing a block of land in Stafford and building a duplex on it. The Brisbane real estate market is brimming with opportunities for investors and there is a property out there just for you – you just have to know what it looks like before you start searching.
If you’re ready to start your journey in real estate, make sure you educate yourself about the industry and your chosen investment strategy before taking the plunge. The A9 Property real estate blog provides regular, quality content to help you on your journey to becoming financially independent through real estate investment. We are a group of seasoned property investors in Brisbane, and in addition to growing our own property portfolios we want to help you grow yours too – check out our hand-picked selection of off-market properties listed for sale. Not sure where to start? Get in touch with us for an obligation-free chat and we can help you take the first steps on your road to financial independence.