In Australia, the contest between shares and property is an ongoing one. While the two are often presented as alternatives, the fact is that they’re very different investment vehicles. Which one is best for any individual or entity will depend on the particular circumstances.
For investors, tax can be considered a cost of investing. While considerable tax breaks exist for property investors, there are generally fewer tax exemptions and deductions available to share investments.
Depreciation, mortgage insurance, repairs, bank charges, advertising, cost of purchase, rates, management fees, interest, and capital works are just some of the expenses that can be deducted on an investment property. If you’re a developer as well, further deductions may apply which can be calculated with the assistance of real estate development software.
With rental markets tightening around Australia, property investing is a more attractive proposition than ever. Research and due diligence, ideally with property valuation software and solid feasibility studies, are key to building a successful investment portfolio. In addition to neglecting due diligence, we look at some of the common investing errors to avoid.
1. Not Conducting Due Diligence
Due diligence covers more than a physical inspection of the property. It should include a thorough investigation of the local rental market, vacancy rates in the area, and zoning issues. It should also incorporate a formal feasibility study incorporating an accurate valuation, a cash flow analysis, and other core feasibility tools such as return on investment and net present value.
Property investment software can streamline the due diligence stage and ensure that investors are making informed decisions based on key performance indicators.