Real estate is one of the most popular investment assets around, but have you ever thought about the different types of real estate investment and how these could impact your bottom line?
Different investments will perform and behave in different ways, so you’ll need to consider which type (or types) of investment best suit your individual budget and plan before you buy.
Whether you plan on specialising in investing in a particular type of property, or diversifying your portfolio, here’s a brief overview of the different forms of residential real estate properties to consider.
Since residential housing tends to remain in high demand for both renting and selling, this type of investment generally delivers fairly stable returns for real estate investors.
Providing you invest in a location that appeals to renters, the capacity for capital growth is relatively high with residential housing.
Ideally, you will want to find tenants who are willing to maintain the land that accompanies your property to reduce maintenance costs.
Youll also need to make that big decision between purchasing new or older residential property.
Whilst an older property may attract quality tenants, this type of housing could see you splashing out the big money on maintenance and renovations.
With newer residential properties, on the other hand, you could be looking at reduced maintenance costs, less need for renovations, and more deductible expenses (although this can come with a higher price tag).
Dual Key Homes
Whilst dual-key homes may appear as a single property from the outside, they actually feature two independent dwellings on the inside.
The obvious benefit of this type of real estate investment is that dual key properties house two separate parties under the same title; and double the tenants means double the rental income.
Since dual-key homes are relatively new to the Australian property market, it’s difficult to determine current demand for these types of properties.
However, there is a clear demographic that dual-key homes could appeal to. Whilst an attractive choice for families with an elderly relativel who needs to live nearby, dual-key homes also offer low-maintenance dwellings for students looking to live within walking distance of their campus and local amenities.
Units and Apartments
Units and apartments are often a popular choice for real estate investors.
Often located near amenities and public transport routes, multi-home complexes hold a relatively stable capacity for capital growth.
However, there are still a few factors you’ll need to consider when it comes to budgeting for this sort of investment.
Firstly, multi-home complexes usually have a body corporate or strata manager who oversees maintenance of communal areas and the exterior of buildings. They usually levy a strata fee or levy to cover the required maintenance of lifts, pools as well as other common areas and facilities covered by the corporate body. This cost is dependent on the level of maintenance required.
Another point to note: if you plan on taking the route of furnished apartments, make sure you know your tax entitlements. Furnished apartments are generally ideal for the financially-savvy investor who will keep on top of maintenance costs and deductible expenses when it comes to tax time.
Investing in a holiday home could provide some serious lifestyle benefits for you and your family. However, you will need to consider the bigger picture with this type of real estate investment, especially if you plan on renting the property out while it’s not in use.
Whilst investing in the right holiday home could lead to great rental returns and a decent profit margin when (or if) you decide to sell further down the line, there are also obvious factors to consider with this type of real estate investment.
Whilst not always the most stable investment in terms of rental returns, investors also need to budget for the additional costs of maintaining and insuring a holiday home.
If you plan on renting the property out for part of the year, you need to be aware of the tax laws that could affect your investment.
The safest practice here is to enlist the help of a financial advisor who can help you understand your tax entitlements and minimise your expenses accordingly.
Managing your portfolio
Whether you’re new to Perth’s property market or an experienced investor looking to expand your portfolio, the property management team at Rentwest Solutions can help you make the most out of your investment properties after your initial purchase.
As well as overseeing the rental collection and maintenance of your Perth properties, our dedicated team of specialised property managers can help you develop a long-term investment strategy to ensure youre getting maximum returns on your real estate investments for years to come.
Need help managing your Perth property portfolio? Contact Rentwest Solutions on 9314 9888 or email us at [email protected] to find out how we can help.