The Return of the Property Investor
05 November 2011
One of our listings which sold yesterday was purchased by an investor. The net return (rent received less expenses) works out to be around 4.8%. It’s been interesting during the last six months to observe the increase of investors in the marketplace, especially considering the disappearance of the depreciation on rental properties which became effective on April 1 this year. When you consider the example of the 4.8% net return against other investments real estate may be a pretty good place to put your money.
Bank deposit rates are around 4% - 4.5% which isn’t too bad. However there is certainly a feeling that banks may not be as safe as they once were, especially considering the drama going on in Greece and with the Euro currency.
Anyone who follows the share market knows that it appears to be a lottery with world markets surging and falling in dramatic fashion. It is an unnerving place to invest a lot of money at the moment.
So back to real estate. I think if the property location is strong, it’s probably secure as any investment at moment. The returns are similar to bank deposit rates and most importantly the opportunity for substantial long term capital gain is good. And that’s probably why real estate investors looking to purchase are increasing.