Property Management: Making Investment Properties A Profitable Venture

The tax benefits and the high capital growth potential from investment properties are the advantages that cannot be ignored

. However, most of the times, there is too much stress and hassle involved in buying and managing investment properties. This is where property management comes to your aid.

Given below are some of the tips that can help you make the most of your investment property:

a)A long-term view: Not every investment property can yield you the desired results. There are substantial upfront costs involved in investment properties such as stamp duty and legal fees. When selling the property also you will have to bear other costs such as the real estate agents commission, capital gains tax and others. In order to gain profits with your investment property, you have to take help of a property management expert who can give you an estimate of the selling price of the property and the costs and after-tax costs, so that you can weigh the possible benefits from the particular investment property. If the overhead costs are greater that the estimated profits then it is not advisable to invest in that property.

b)Selecting the right investment property: Here again a property management expert can guide you well on the investment property that can be best for your budget and requirement. The location of the property should be given utmost importance because the chances of growth in prices of property depend on the area. Moreover, a property that is difficult to rent out can drain out your cash. To maximise your rental returns, you should invest in properties that are preferred by tenants.

c)Negative bearings: The tax benefits from an investment property should also be considered when making the purchase. If your investment property has negative bearings, i.e. the cost of purchasing and maintaining the property is greater than the rental income you receive, then you can enjoy the tax benefits. The difference in cost of purchasing and maintaining and the rental income can be claimed as a tax deduction.

d)Select the right loan for investment properties: There is a wide range of loan features that you can choose from, depending on the variable rate, fixed rate, combination between variable and fixed rate, principal and interest or interest-only loan.

e)Hire a professional property manager: Investing in a property, be it rental or residential property, there are a number of risks involved in buying a property. This is why hiring a property management expert is mandatory to help you yield higher benefits on your investment by weighing the pros and cons of the particular investment property.

Furthermore, there are some factors that you must consider when buying an investment property including the population in the area, transport, shops and services, affordability for the tenant, affordability for the investor and research.

by: arika rastogi

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