expert-q-a

Investors ask: Luxury properties

By Margaret Lomas

Q. The properties I currently own (three units, one house) are positively geared. I want to add a luxury property to my portfolio. How can I work out how this will affect my overall strategy?

A. Often investors decide they would like to add a property to their portfolio from which they obtain lifestyle benefits, such as a holiday apartment, or high-end city property. It can be easy to justify, and so many end up owning a property that fails to perform, sometimes affecting their entire portfolio.

Such properties generally exist in popular holiday areas and come with owner incentives, for example a tax-free holiday to inspect, but such benefits mask poor performance.

Luxury properties generally experience high vacancy rates, high expenses and, if in a popular area, oversupply. Ig the resort venture fails they can be difficult to sell. If the property is not part of a resort but for standard letting, they have lower yields, often below three per cent, which means the investor must pay to make up the shortfall.

You probably can’t take that tax-free holiday anyway – if a holiday figures in the trip, the deduction won’t be allowed by the ATO.

Keep buying properties that can quickly become positive. Once that portfolio is large enough you will not only be able to holiday wherever you want, you will build enough wealth to choose any property you’d like by the time you get to retirement.

Margaret Lomas, founder, Destiny Financial

Thank you.

Your enquiry has been sent to a local Aussie Mortgage Broker.

We will be in contact with you shortly.
Opps.

error occurred.
Unfortunately Aussie cannot attend to your home loan related enquiry at this stage as you must be a citizen or permanent resident.
Do you need help finding the right loan for your investment?
What Aussie do for you:
  • Give expert mortgage advice to help you find great investment loan deals
  • Help you maximise return by lowering financing costs
  • Save you time and effort by helping with the paperwork
First name
Last name
Location
Mobile Number
Are you an Australian Resident?
promoted stories

Top Suburbs

Highest annual price growth - click a suburb below to view full profile data:
1.
BLUE BAY 49.18%
2.
PAMBULA 43.5%
3.
BERKELEY VALE 42.74%
4.
POINT PIPER 40.52%
5.
NORTH TURRAMURRA 38.12%
Investors ask: Luxury properties
SPI logo