Lower income earners should look towards property as an investment even more so than those on higher salaries, according to a leading investment group.
While many think they should be wealthy to own an investment properLower income earners are encouraged to look towards property investingty, Aviate Group managing director Neil Smoli said that it is an ideal path to financial security for the average Australian.
“In many ways it makes more sense for individuals, couples or families with a comparatively lower income to invest in property as it can provide financial security and reliable returns well into the future, not just for the purchaser but for generations thereafter,” Mr Smoli said.
“Obviously the need for security is critical, which is why as an investment class residential property has proven successful for so many Australians.”
Tax advantages, long term capital growth opportunities and rental income can all be utilised by lower earners who should see the low volatile asset class as aligning with their ultimate financial goals.
Many investors over-estimate the entry level price for a decent investment, Mr Smoli said.
RP Data statistics indicate that properties can still be found for under $200,000 with decent returns.
“A degree of apprehension about embarking on a property investment is natural, particularly for those with lower incomes, which is why undertaking the correct due diligence is of paramount importance,” Mr Smoli said.
It’s important to ensure that investing will not put you under financial stress, particularly if you fall in the lower income bracket, Smart Property Adviser Kevin Lee told Smart Property Investment.
He recommends that lower income investors aim to look in other directions for neutrally geared properties that can be tipped over into positive territory.
One investor bought a $52,000 property at auction and spent $18,000 on a renovation.
“That house rented for $150 a week the first day it was on the market. The tenants are going to pay that loan off in eight and a half years,” Mr Lee said.
Factors such as location, proximity to transport and retail amenity, as well as economic influences and vacancy trends should all be taken into account when finding a good low-cost entry to the market, Mr Smoli said.
“Every property investor, regardless of their income, should place a high value on their long term security and that of their investment. Our whole approach is dictated by this underlying principle.”
Latest Australian Bureau of Statistics data indicate an average yearly Australian wage of $64,641.