21.08.2013

Investment Options: Property Investments

Investing in property, this can either be done directly or through a listed investment vehicle. If you are going to invest directly in property you can either buy residential or commercial property.

They have different features and benefits depending on what you are looking for.

Typically a commercial property with have higher income yields but lower growth characteristics than a residential property.

The important thing to understand is how do you get in and how do you get out. With property, the transactions costs can be quite high. They include stamp duty, legals, and possibly capital gains tax on the back.

If you don’t have a sufficient deposit to buy a property directly you can still get access to the property market. You can do this through a managed fund. Just like we mentioned in the previous video you can put a small portion in and get access to a larger group of properties. The disadvantage however is you have no control of which properties are actually purchased?

When considering buying a property it is important to understand the following things. You need to look at the growth – What are the key factors that make the property grow. You need to look at the cash flow – what will it actually cost you to buy that property and you need to look at it in terms of your whole situation. Will purchasing a property prevent you from making other financial decisions in your life?