The benefits and drawbacks of investing in property

If you are considering property investment, it is important to weigh both the potential benefits and drawbacks so that you can decide if it is the right choice for you. The experts at Noel Jones have compiled an in depth list below exploring both sides to help you on your investment journey.

The benefits of property investment

No specialist skills required. If you’re new to investing in property there is plenty of information available from a variety of sources – online, your local bank and local real estate agent.

Growth of your asset. Your asset is likely to increase in value over time. Some will grow at a faster rate than others, however those with slower increase rates can still deliver a good return if held on to for a reasonable period of time.

Someone else is helping you pay for it. With rent money being paid by a tenant on a fortnightly or monthly basis your own financial contribution will be reduced. The shortfall will depend on your purchase price plus initial start-up costs, and how much you are able to collect as rent.

Potential tax benefits. If you have a property that is negatively geared, it may provide you with some substantial tax benefits. One such method is through negative gearing which means you can claim tax benefits where your costs of financing and managing your investment property are greater than the income generated from it. This can be one of the best ways to reduce your outgoing taxes so talk to your accountant or financial planner to ascertain if this would be of benefit to you.

Involvement. You can have as little or as much control over managing your investment as you choose, unlike other holdings where you will likely have little involvement. You may choose to manage the property on your own, or you may enlist the assistance of an experienced rental property manager to do this on your behalf.

Protection of your asset. Unlike other investments, property is something you can insure to mitigate risk. Many insurance companies now offer ‘Landlord Insurance’. This can cover you for a range of things including property damage by the tenant, loss of income due to tenants breaking the lease or long term vacancy plus damage by fire/flood/storm.

The drawbacks of property investment

Initial start-up costs. As well as the purchase price of the property, you will need to consider stamp duty, legal or conveyancer fees, potential broker fees if you buy through a specialised property investment company and the possibility of mortgage insurance depending on your borrowings. These can add thousands of dollars to the initial cost of the property unlike other forms of investment.

The ongoing cost of property investment. Most investments types do not have an ongoing cost associated with them, however property will always have a certain amount of ongoing expense attached. You need to consider the cost of land tax, water, council rates, body corporate fees, property maintenance and repairs, building and landlord insurance to name a few. There is also the possible shortfall between your mortgage and your rental income.

Liquidity. Selling property can be more time consuming than selling other investments such as shares. If you find you need quick access to cash the process to sell your investment property from property appraisal to settlement will usually range from 30 days to in excess of 120 days.

Periods of vacancy. There may be times when your property is not tenanted or in between tenants, leaving your asset vacant. Without rental income you will need to have the money to cover the entire mortgage payment yourself.

When deciding if property is the right investment strategy for you it is important to carefully consider all of these factors and come to a conclusion that is right for you. For more information or to find out how we can help you on your property investment journey contact your local Noel Jones agent today.


More Posts

Meet Our April CSP Grant Winner

Congratulations to Croydon Ranges Hockey Club for receiving the April 2024 Noel Jones Community Support Program Grant. Croydon Hockey Club (CHC) was established in 1954, with a long rich history of creating a family friendly environment and successful players. The club, now named, Croydon Ranges Hockey Club (CRHC), welcomes new players across all levels of the club including Hookin2Hockey, juniors,

Market Update | April 2024 Edition

In March, Melbourne’s real estate market remained in a holding pattern, with many buyers and sellers remaining focused on interest rates, hoping cuts predicted by leading economists will be implemented in the near future. However, a recent article in The Financial Review reports many experts are now forecasting that cuts may not be seen until late in 2024 or early

Meet Our March CSP Grant Winner

Congratulations to Warekila Pre School for receiving the March 2024 Noel Jones Community Support Program Grant. Warekila Pre School, located in Nunawading, has a strong focus on play based learning where they provide a rich and varied learning environment which allows long periods of uninterrupted play for both indoor and outdoor settings. One of the schools other strong focuses is

Home Staging Tips for Maximum Impact

Selling your home can be a stressful process, but there’s one strategy that can significantly boost your chances of a quick sale and a top dollar offer: home staging. Home staging involves strategically arranging furniture, decluttering spaces, and creating a warm, inviting atmosphere that appeals to a broad range of buyers. Here’s how to stage your home for maximum impact:

Send Us A Message

Good Job!

Thanks for taking the time to let me know about your needs.

I look forward to helping you find your new home.​

Buyer Requirements

Thank you!

I’ll be in touch soon with information on the suburb you’re buying in.

Find Out More