As mortgage brokers for properties in Baldivis and other Perth suburbs, we work with a lot of financial information regarding property investment. We have seen investments succeed and we have seen investments fail. Here are some property investment myths that can sabotage a property investor before he or she ever gets off the ground.
“All Property Will Increase in Value”
Most property does increase in value over time but there are exceptions. The way to make sure your property doesn’t decrease in value is to do what is known as “due diligence.” We recommend homes in suburbs that are poised for long term capital growth, such as “hot suburb” Baldivis and most suburbs in the Rockingham area.
As for those exceptions: property in a mining town during a mining boom is risky. If the mine closes, expensive property is now relatively worthless. Stay close to transport and infrastructure.
“It is Impossible to Find Positive Geared or Neutral Geared Properties”
Once again, this is generally “true,” but there are notable exceptions that require research or “due diligence.” Are you seeing a pattern yet? It is difficult to find a property in which the rent exceeds the mortgage repayment but it is still possible. One “work-around” is renovating a “bargain property.”
“Negative Gearing is Always a Win”
Negative gearing does come with tax benefits but too much of it can put a small investor in a “hole” and result in foreclosure. It is important to make sure that you have the funds to subsidise your property until it increases in value or rents increase enough to provide you with revenue.
“Anyone can Time the Market Cycles”
Timing the market cycles in search of a “deal” is a fool’s game. Sometimes you win but more often you will lose. We have seen a lot of instances in which investors were waiting for the market to drop, only to see it rise and miss out on great opportunities.
Once again, it comes down to doing your research, knowing your market and finding properties that will provide consistent returns.
Call the Mortgage Brokers at Smartline Rockingham
To learn more, call us today: (08) 9527 1800.