According to Steve Navra, a leading financial consultant and property investment adviser, there is no better time to invest in rental property than the present. Mr Navra adds that rental property is increasingly becoming the investment avenue of choice for those seeking regular passive income for retirement in Australia. He however cautions that a would-be investor must first weigh all of the pros and cons which are associated with the process of buying and maintaining rental property in Australia before they put their money in the market.
The following is a running summary of the more important pros and cons outlined by Steve Navra.
Benefits of Owning Rental Property for Retirement
1. It is a safe investment
Of all the investment markets in which you could seek to earn a retirement income, the property market is arguably the safest. For starters, the value of your investment will grow over time and in a matter of a few years is more than likely to have paid for your capital several times over. According to Steve Navra, since the property market is not dominated by speculators as other sections of the Australian economy are, you can count on a virtual buffer against sudden and unexpected swings in the value of your capital. The financial expert also points out that even if you buy the worst possible house in a particular area, it is almost a virtual certainty that its value will increase rapidly over time.
2. You can predict and mitigate the risks
Unlike many other investment options, the risks which could put your rental income in jeopardy are quite few in number. Where these exist, they are easy to plan for and almost certainly insurable. The most common risks you have to beware of (and plan for) include, fire damage, idle units (without tenants) as well as tenants damaging the property or breaking the lease. There are affordable property insurance policies covering all of these risks.
3. No special skills or know-how required
Unlike other fields such as the stock market or opening a new commercial enterprise, you are not required to have any special skills or knowledge to enter the market and make a success of it. Virtually anyone can invest in real estate, whether the property is meant for rental purposes or otherwise.
4. You are in control
Many investors who put their money in rental property do so from a desire to remain in control of their capital. While it is a common practice to give over rental property to the hands of property managers, the owner is still fully in control of their investment. As the owner you can make all the decisions and retain control of all the returns.
5. Tax benefits
Property investors stand to enjoy a raft of tax benefits depending on where they invest. Both the federal government and local authorities are increasingly giving tax benefits and other rebates to property investors, especially those who incorporate green concepts in their designs. Understandably, seeking to enjoy state tax benefits should not be a driving factor for investing in rental property but the advantages are plain and considerable.
Detriments of Owning Property For Rental Income
1. Rent free periods
As a landlord, you will have to contend with the very real prospect of some of periods of time when some or all your property units will be without tenants and therefore bringing in no rental income. The possibility of property lacking a tenant is most likely when the building has just been announced in the market. Even if it is conceivable that your property will continue rising in value even if it remains tenant free, it can be very taxing if you have to make mortgage repayments nonetheless.
2. Problem tenants
The so called “tenants from hell” are every landlord’s nightmare and can be a cause for endless frustrations. It is not just about failure to pay the agreed rent or honour some part or the other of your mutual leasehold agreement but it can be about costly damage to your property as well. According to Steve Navra, some landlord-tenant disputes can drag on for years and lead to significant financial losses by the time they are resolved.
3. Property is not as liquid an investment
Many who opt to pour their retirement money into rental property are quite happy to sit back and watch the value of their investment increase over the years. While the income you receive monthly will be substantial, if you ever need a goodly amount of money in a hurry, it is hard to convert your property back into cash in time. Alternative investment options such as stocks are much more feasible option.
For more helpful advice you can get in touch with Steve Navra and his team at http://stevenavra.com.au/.