The investment game is tough and if you’re just starting out, it’s easy to fall into marketing traps.
Here are four property investments that may trick you so make sure you take your time reading the fine print:
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Off the plan developments. There are significant benefits to buying off the plan, including no stamp duty, depreciation opportunities and the potential need for a smaller deposit. But some risks could cost you, too. Watch out for developer profit margins and high selling agent commissions, which can add 25-35% to the market value of a property. In many cases these margins can far outweigh any savings in stamp duty, slowing down your capital growth.
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Serviced apartments or student accommodation. Lenders can see these types of specifically-zoned properties as higher risk, so they might make it harder to source finance and sell later down the track.
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Foreign property markets. There’s been a lot of editorial inches on the opportunities foreign property markets deliver compared to the Australian market. However, before you get lured by lower house prices overseas, make sure you understand the country’s taxation, investment and property management laws, so you don’t get burned.
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The mining boom. Many investors rushed to purchase property in mining towns, enticed by the rapid growth in home values. What they don’t realise is how volatile such investments are – with a transient workforce and equally rapid decline in property values when the ore runs out, you’ll want to have a cast iron strategy to ensure an adequate return.
When you’re investing hundreds of thousands of dollars, it pays to do your research. Make sure your investment pays off – get a mortgage broker’s perspective on your investment strategy.
To run through your options, reach out and let’s talk.
My Very Best To You Always,
