In today’s so-called hot real estate market, many of us want to own property, whether a unit or a house, whether a rental property or a home.
And, with recent increases in median home prices, it can be difficult to avoid thinking of a home as an investment.
In South Australia, typical gross rental yield on a unit or a house is between 4% and 5%.
Meanwhile you could get a dividend yield between 5% and 6% on an Australian ASX ETF – www.fool.com.au/2021/12/10/which-asx-dividend-etf-offers-the-highest-income-yield-right-now/
A couple of questions…
First question: Why does someone want to own a rental property? Typical response: To build equity and have a source of passive income.
Second question: Why does someone want to own their own home? Typical response: To build equity and enjoy capital gain.
The underlying assumption of both these questions is that property prices always rise, which isn’t always true, especially if we consider a specific individual property.
Third question: Why does the person want equity, capital gain and passive income?
There’s a natural human desire to flourish – enjoying peace, safety, comfort, stability, privacy, freedom to enjoy friends, activities, leisure etc. A large part of the means to flourish in today’s Australia is a combination of income and capital – which many seek in property as well as other investments, in addition to income from a job or business.
Part of the unspoken response to the Second Question above, is that most of us aspire to owning and living on our own Place, as distinct from a “this is where I live” situation which implies occupancy rather than ownership.
When I engage with a potential new client, we discuss their plans, hopes, dreams and aspirations, before we can arrive at a detailed brief to guide the property search. So the first meeting is about the client, rather than about the property.
Having a good understanding of the client’s profile enables a search for property characteristics far beyond the number of bedrooms & parking spaces – the typical list of features usually advertised when a property goes to market.
Having identifed potentially suitable property, the next step is Due Diligence to ensure it has no ‘unfixable’ issues, and confirm whether it’s a candidate to become the platform for the Client to flourish.
If it is, and the Client approves it, the next step is to work with the agent (if it’s on the market, otherwise the owner) to arrive at a contract that both parties approve.
