PHOTO: Graeme Fowler: “I’ve been investing for about 30 years and started saving as much as I could in my early 20s for a couple of years to buy my first rental.”
OPINION: Here are some of the biggest misconceptions I see about property investment.
Are investors paying their fair share?
One of the biggest misconceptions about property investors is that we are all wealthy. While some of us are, 99 per cent are not; they have full-time jobs and struggle to make ends meet like any other families do. If a tenant doesn’t pay rent or unplanned maintenance needs doing, that money has to come from somewhere. Sure, it is usually tax deductible, but you only get to claim a third of that back the following year. And now, thanks to ringfencing, only against income made from rental properties.
The majority of property investors have only one or two properties as rentals. They pay tax on anything left over after the mortgage and all maintenance, rates and insurance; which is usually very little, if anything. We do pay tax also on the principal paid off the loans. It usually takes many, many, years of investing in residential property before any real money is made.
I know more investors that have gone bankrupt than I know that have been successful over a long period of time.
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