What makes one investment property better than another?
Hi, Brian and David here from Bugwash Property.
We’re having another chat about landlords. David, are all residential investment properties good properties to hold as investments?
Very good question, Brian.
I’m gonna use one of my own examples. I own some duplexes in the Mackay area. Now at one stage, I built three duplexes in the same street, I’ll never forget it. Those duplexes cost me $615,000 each. And at the height of the boom phase of the cycle, I was getting $1,200 a week rent. Basically a 10% return which is awesome.
Now that same property later on, my rent dropped by 50% so, a great property to have can be great when the time’s right, but if you have that same property through different parts of the cycle, it can become a very average property investment. So the number one thing that I’ve learnt through doing this for 20 years, is that it’s all about having the right properties in the right markets, at the right time. Selling when the time’s right, selling at the top of the market and then not holding your properties through the slow-down, slump and recovery phases of the cycle.
And you’ve got the other scenario where you can talk about new properties versus old properties, I mean there’s a lot more to it, but you know, if you’ve got an old property, the tax deduction’s can be very, very little or next to none, so a lot of times it can cost you, it can cost a landlord less out of their own pocket to own more expensive new property with more tax deductions and less, no or less maintenance than an older property, it might be cheaper to buy but your tax deductions are way less and your maintenance is way more.
So there’s a lot of factors at play but its all about learning the ropes, learning through people that have done what you’re trying to do.