Property as an investment asset class
Property can help diversify your investment portfolio, with varying outcomes over time, depending on what type of property you invest in. It is therefore important to understand the nuances of property investment and its role within your overall financial strategy. At Dixon Advisory, we can assist clients with all of the key elements of investing to help them achieve their portfolio objectives.
Key considerations for property investing
Typically, Australians purchase property either directly or through an investment fund and generally make this investment either in their own name, through a trust or within an SMSF. They are choosing property as part of their investment strategy because of the:
- regular income from rental returns
- potential capital growth from rising property values
- lower level of volatility compared to many other growth oriented asset classes
potential of positive tax outcomes (i.e. negative gearing and property expense deductions).
All property decisions must however consider the costs and risks, including:
- expected rental returns not meeting expectations
- decline in property value in certain market conditions
- purchase costs (e.g. stamp duty, legal fees, advice fees, property inspection reports and loan establishment fees)
- ongoing costs (e.g. property maintenance, rates, body corporate fees, bank fees and insurance)
- lower liquidity than other asset classes (e.g. shares).