Buying a home is a milestone for many Australians. It is a tangible proof of the years of hard work and perseverance to have your own place. There are a lot of people who look forward to that day when they stop paying rent or living with relatives. It gives them a sense of achievement, so it’s no wonder why many people aspire to buy their own homes.
Any Australian property investor knows that there are critical differences between investment property and purchasing a house.
A home is a property and can be a form of investment, but buying a home is very different from investing in property. Any Australian property investor knows that there are critical differences between investment property and purchasing a house. In this article, let’s take a look at six reasons why investing in property is not like home buying:
1. Personal preferences are not needed
Investing in property involves looking for properties in areas where there is high demand and have the potential to appreciate over time. Also, the property is most likely intended for someone else. When buying a home, you are finding a property with features and amenities that suit your needs and lifestyle.
2. You don’t have to be emotionally attached to it
Since the property will be used by another person, you don’t have to love it, unlike when buying a home wherein you need to find one that you and your family love.
3. The investment property should bring in money
The goal of an Australian property investor is to generate money from the property. This is different from home buying wherein you may be paying off mortgage for many years.
4. You don’t have to directly manage it
When you buy a home, you will be responsible for its maintenance. When you invest in property, it’s the opposite. There’s a property manager who can handle everything that needs to be done to maintain the property.
5. Know the effects of the surrounding environment
As an Australian property investor, it is crucial to know the environmental issues as these can affect the investment value of the property.
6. Set a budget for property management costs
While both homeowners and property investors take costs of maintaining the property into account, homeowners don’t usually think about how property management increases or reduces the value of their homes. On the other hand, property investors need to consider all costs as they intend to turn their property into a source of income.
Got other ideas on investment property in Australia? Share your investment property advice in the comments section.