Rental homes v investing

GET FULL PICTURE: EVERY INVESTMENT STRATEGY HAS ADVANTAGES AND DISADVANTAGES

- Lana Visser-Galant

In this precarious investment climate, it is always important to do the necessary research to determine the best strategy for you. Each person's investment plan should be tailored to their circumstances, and all aspects should be considered before investing. In this article, we'll explore the pros and cons of a unit trust versus a rental property and how both can impact your cash flow and tax return.

What to consider

Availability: Be thorough in your search for available properties. Once you've narrowed them down, research the possible rental income that can be received. Benchmark this against alternative investment options such as unit trusts, tax-free savings investments, or a share portfolio.

Affordability: Know exactly what you can afford. If you don't have a lump sum to purchase a property or to invest as a down payment, you should consider whether it would be better to invest monthly or finance a property by applying for a bond.

Term of investment: Be clear about your goal. Is this a short-term or long-term investment? If short-term, a rental property may not be the best option. If longer-term, then the option of a property should be compared to an investment.

This possible return that can be achieved will help you make the best decision. The investment term will then determine the level of risk that one can take and the potential growth that can be achieved.