Making a major investment doesn’t always involve saving wads of cash first. In fact, it’s quite common to borrow money to invest, especially if you plan to invest in property.
You could take out a home loan to invest in your own home instead of renting, or buy an investment property that could be rented out to residential or commercial tenants.
Here are three reasons to consider adding property to your investment portfolio.
1.You can take advantage of capital growth.
Investing in property is one of the biggest investments you could make – and it could also be one of the most rewarding. Unlike highly volatile investment options, investing in property is a relatively stable choice. The property market does fluctuate and conditions vary, but over time you would be likely to see an increase in the value of your property.
2. You can receive rental income.
If you invest in a property other than the one you live in, you’ll have the opportunity to have tenants. Your tenants will pay rent, which you can use to pay off your investment loan.
3. Enjoy tax benefits.
If the money you spend repaying on your property investment outweighs the income you receive from your tenants, you can claim the difference as a tax deduction. This is known as ‘negative gearing’ and can be a very handy tax offset.
Every investment comes with a degree of risk. With property investment, you need to weigh up several factors, including the risks associated with fluctuating property prices, bad tenants and the possibility of having stretches of time when your investment property is empty between tenants.
At P&N Bank, we have a team of qualified financial planners to help you weigh up the benefits and risks of your investments to find the right solution. Find out more about our financial planning services.
If you want to read more about getting started with an investment property read our How To's.
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