Choosing the right investment property – because not all properties make good investments


Investing in Residential Real Estate is usually a long term investment that can provide people with financial security and a passive income when they retire. It should not be treated as a “Get Rich Quick” scheme.

A good investment property should ideally provide an investor with excellent future returns in the form of capital growth as well as good rental returns, income and tax benefits. As an investor, you need to maximise your returns by selecting the right property for investment. Your age, where you are at in life, your future plans, etc. will all be important factors to consider when purchasing an investment property and setting up the structure (whether to purchase in your name, joint names with a partner, a family trust or self managed super fund, or a company name).

When investing in Residential Real Estate, savvy investors need to look for:

  • Strong and stable rate of capital growth – Demographic, location, near-by infrastructure, industry, owner-occupied areas and general condition of the home are important factors to consider

  • Steady and reliable cashflow

  • Liquidity – The ability to take money out of the investment by selling or borrowing against the investment (refinancing)

  • Easy management – Limit ongoing issues and maintenance concerns

  • A hedge against inflation

  • Favourable tax returns – The age of the property is important and whether you are looking to negatively gear the property.

 According to REIQ facts, only 72% of people who own investment properties own 1. 18% own 2 investment properties and less than 3% own 3 or more. “Mum and Dad” investors (Non professional investors or small scale investors) are integral as they supply over 80% of the rental market stock.

Australian Bureau of Statistic figures verifies that more than 60% of all property investors are negatively-geared. This means they make an average loss of around $9000 per annum. While some investors need to make a loss to reduce their taxable income, many investors sell at a loss and never invest in property again.

At Shield Management, our Agency has the knowledge and expertise to guide and assist our owners to purchase the right property to meet their individual investment needs.