Real Estate Profit Drivers

There are four ways to make money out of the property investments:  Passive appreciation, active appreciation, rental returns and tax benefits.

Passive Appreciation: This occurs when you purchase a well-positioned property with a good location and it increases in value along with the general property market over time.  History has shown that good properties in Australia double in value every 7 to 10 years.  Hence, property is best viewed as a long-term investment.

Active Appreciation: This happens when you take an action to increase the property’s value.  Maybe you add a granny flat or redevelop it in some way.

Rental Return: This is the most common source of return of investment, since is provides cash flow.  But it’s important not to place too much emphasis on rentals, remembering your overall investment return.

Tax Benefits: Property is probably the best investment for tax benefits due to negative gearing and depreciation allowances.

It’s important to keep all four of the income producing qualities in mind when investing in property.  One reason is that well-located residential properties have inherently high growth rates.  This means that the rental returns are always going to be low yielding on this type of property.

Real estate investment should be reviewed as a long term investment for this very reason, but, at the same time, it is one of the most secure.

If you have a real estate question or need,  feel free to phone the friendly sales team at Ray White Alexandra Hills on 07 3824 2700