How does property investment work?

Property investment involves purchasing real estate with the goal of generating income and building long-term wealth. It’s apopular strategy in Australia, thanks to a strong housing demand and the potential for good rental returns and capital growth.

Purchase an investment property
You might use your wealth strategies in order to buy your investment. Thismight be a house, unit, townhouse or dual-income property. The goal is to rent the property to tenants and earn income, while the property ideally increases in value over time.

Earn rental income
Rent from tenants helps cover costs such as the mortgage, council rates, insurance and maintenance. Rental income is considered taxable, but many related expenses can be claimed as deductions.

Benefit from capital growth
In Australia recently we have seen some great capital growth. Should your investment property rise in value, you may profit when it’s sold. This is known as capital growth. Suburbs with strong demand, infrastructure investment, and low vacancy rates are more likely to experience solid long-term growth.

Use equity to grow your portfolio
As the property increases in value and the loan balance reduces, you build equity. This equity can sometimes be used to help fund the deposit for another property, allowing investors to grow their portfolio over time.

Work with trusted professionals like DPN
Most investors rely on a team that may include a mortgage broker, property developer, finance professionals, property manager and property experts. These professionals help with finance, development, and managing the property.

Final thoughts
Property investment is a long-term strategy that requires careful planning and ongoing management. When done well, it can provide steady income, capital growth and long-term financial security.

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