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Cairns Investment Property: Pros and Cons

Cairns Investment Property

With the property market maintaining its strength, many people are turning to a Cairns investment property or another asset in this class to secure their future or create a passive income for themselves. 

Like any investment (such as pink diamonds, crypto, or the stock market) putting your savings into the property market carries risks, but it can also prove bountiful for savvy investors who buy and sell at the right times.

That said, before you tie up a large amount of money in a Cairns investment property, you should understand the pros and cons so you can decide whether this type of investment matches your current financial possibilities and future goals.

Why should you consider a Cairns investment property?

As a popular tourist destination known for its tropical climate, the Great Barrier Reef, and proximity to the Daintree Rainforest, Cairns is an attractive place to get an investment property.

Cairn’s appeal and market are only expected to grow because the city attracts a significant number of tourists each year who come to explore the natural attractions, and in turn, this keeps investors interested and active in the area.

Another reason to consider the city is that prices are much more competitive than those in big cities like Sydney, plus, they come with the expectation that they will keep rising with time. This means that for you, there could be no better time than now to invest in the region.

Pros of a Cairns Investment Property

Investing in a house, unit, or block of land can feel more secure than other types of investments because it is a tangible asset that you can see and touch (unlike investments such as shares). If you had to, you could even use the property as your home and you can also personally make improvements to it to increase its value.

Generally speaking, the property market experiences less volatility than other asset classes. However, you should do your research or engage a buyer’s agent if you are not confident in your knowledge of the property market, as not all properties will increase in value at rapid rates.

One of the biggest bonuses of investing in property is that the asset can be used for income while it is gaining value. If you’re lucky, you could also rent the property out at a rate that covers its expenses (such as a mortgage, insurance, and other rates) or at least very close to it. 

Your property expenses also lead to another attractive benefit: tax deductions. Your annual costs can usually be offset against rental income, and this applies even to the interest on your loan.

Cons of a Cairns Investment Property

One of the biggest disadvantages of investing in property is the large upfront cost required. Unlike dabbling in shares, which you can do with hundreds of dollars, you will need tens of, if not hundreds of thousands to purchase an investment property.

Additionally, the ongoing costs can become overwhelming, particularly if interest rates rise or there are periods of vacancy. 

You should make sure that you will not face financial stress if you are required to pay the mortgage on the property without income from a tenant.

If you need to sell due to rising costs, you cannot simply sell off part of the investment (except for subdivided land), unlike other investments where you may be able to offload a portion of the holding for some quick cash.

If the value of the property has gone down by the time you sell, you could end up worse off than before making this investment( after you have accounted for all the costs). This is because you will need to factor in extras such as bank and transfer fees, legal costs, real estate agent commission and marketing, and any other funds you’ve put towards maintaining or improving the property for rental purposes or in the hope of making capital gains.

How should I prepare myself for a Cairns Investment Property?

There is no universal right or wrong time to buy an investment property. You should only venture into the market when you feel ready and speaking to a financial planner can help you make the right decision. They can also help guide you through the process once you’re ready to get started.

What costs are involved with investing in property?

A Cairns investment property has the potential to be financially rewarding and can be a fantastic way to secure your future. However, a large financial outlay is required and if you don’t do your homework, you run the risk of having to sink more money into the property, which could affect your overall return.

Buying costs include:

  • Stamp duty
  • Transfer fees
  • Legal costs
  • Search fees
  • Pest and building reports

 

Selling costs include:

  • Agent’s fees
  • Legal costs
  • Marketing fees
  • Mortgage break fees
  • Capital gains tax (if the property has increased in value when you sell)

 

What costs are involved with owning an investment property?

The costs don’t stop once you’ve settled on your new asset, and it is important to keep in mind that there are ongoing costs related to investing in property. Some of these costs include:

  • Council and water rates
  • Body corporate fees
  • Building and landlord insurance
  • Land tax
  • Property management fees
  • Repairs and maintenance costs

 

Only you can know if you are ready to begin investing in property. If you need advice or assistance with financial planning, you should seek the guidance of a professional who can listen to your financial goals and help you align your investments to them. 

If you are looking to purchase an investment property, contact one of our experienced mortgage brokers today at (07) 4052 0751.

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      CAIRNS LATEST PROPERTY GROWTH BY SUBURB

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