With the government making changes to the old age pension recently, many people are looking to alternatives to supplement their retirement in the future. Self-managed superfunds, stocks and shares and other investment schemes are possibilities.

Property investment should also be considered; it’s easier to understand, and some consider it’s a lower risk. Plus if you start investing early, it offers the possibility of reducing your work from full to part-time in your later years.

Depending on what your long term financial strategies are, in a nutshell, there are two ways in which you can make money from property; with sound financial advice and a property portfolio, the canny investor can make both financial strategies work for them.

Rental Income

Some investors like to finance their investment so they receive an income from their property – ie the income coming in (the rent) is more than the cost of running the property. This is known as positive gearing or positive cashflow.

This income can then be used for other purposes – enhance your lifestyle, pay off the debt or save for another property or your child’s education. But, as with any income, you will have to pay tax on it.

Many people start-off by negatively gearing their property. This means they are effectively not making an income from the rent because it is been used to pay ongoing costs. The advantage of this is you won’t have to pay any additional tax.

Capital Gains

With capital gain you will not make vast sums of money by selling your property in a couple of years. It is a long-term investment, as over time, generally property increases in value as it has been for many years due to the increase in our population.

After several years, you can either sell the property and pocket the gains, (don’t forget you will need to pay capital gains tax), or use the property as equity, take out another loan and buy another property for investment purposes.

Investing in property is a long-term investment opportunity but you do need make sure you’re properly informed of all the options to ensure you’re getting the best return and you’re working towards your financial aims.

Speak to financial specialists, learn the pros and the cons, look at the risk associated with it and do your research. Once you know your budget, come to us – we will manage and maintain your investment and ensure you’re getting the utmost rental income.

If you are looking for a property management agent, would like to know what you have to do to increase your rental potential, or even just want to know how property management and investment works for future reference, our knowledgeable and experienced team would love to assist.

With over 40 years of business in the area, we are one of Newcastle’s longest established real estate offices, so give us a call on 02 4956 9777 or pop into our office for a chat.