Is Investing In Property Even Worth It?

Confession: I would hate to be starting out as a property investor today.

I’m just not sure it’s worth it anymore?

The costs and considerations that come with compliance alone are almost enough to make you want to throw in the towel before you even begin.

It’s much more expensive than it was when I started out, almost 20 years ago.

Nowadays, when buying or renting out a property, there are a number of extra costs and obligations you need to take into consideration.

In most investments, the rent generally covers the mortgage.

This is a broad generalisation, but by and large, the mortgage interest will be your biggest expense, and in the current market – even factoring in COVID-19 related deductions – the rent covers the mortgage.

There are other expenses you’ll need to cover out of your own income, however.

These include landlords insurance, property management fees, council rates, building and contents insurance (contents covers things like carpets and blinds), and ongoing repairs and maintenance.

If the property is an apartment or unit, you’ll pay strata fees, too.

On top of this, you may need to pay for:

• Safety switch compliance – to ensure the electrical safety switch is current and working. It can cost around $300 to replace the safety switch if faulty.
  
• Swimming pool compliance check or certification; one-off fee, around $150
• Window blinds compliance; this can be bundled with smoke alarm compliance and is something you can do yourself, but if your property is interstate, you’ll need to pay a company an annual fee of around $100 to service it on your behalf. There are strict guidelines on what your obligations are as a landlord when it comes to smoke alarms.
• In Queensland, you also need to have a compliance check run on your water systems before you’re allowed to charge the tenant for water usage. This costs a small feel, and then if your water systems are not deemed efficient, it can cost hundreds of dollars (or even thousands!) to get them up to speed.

All of the above can amount to a really significant sum.

So is it even worth all the stress and time and effort – especially with all of these new laws that have been introduced post-COVID-19, which dramatically favour tenants?

It can seem like a mug’s game.

Until, I’m reminded why property works.

I recently read about a beautiful Victorian terrace that was listed for sale in Crown Street, right in the heart of Surry Hills in Sydney.

The terrace is on the market for the first time in 45 years. It was last traded in 1978, when it was purchased for the princely sum of $65,000.

It is now listed with a price guide of $3-3.3m.

In the last five decades, it has doubled in value more than five times and it has grown in value by around 5000%.

How else can everyday Australians with little financial knowledge and investing education achieve profits and wealth like this, if not in real estate?

Do you own investment properties or you’re considering investing in the future? 

Educate yourself about where property prices are set to go following the pandemic with in-depth advice from  Michael Yardney, an experienced investor.

Author: Sarah Megginson is editor of Your Investment Property Magazine, where this article was first published – read it here

NOW READ: Is now a good time to buy property considering the Coronavirus led recession?

from Property UpdateProperty Update https://propertyupdate.com.au/is-investing-in-property-even-worth-it/