Pros & cons of investing in property
An honest look at the benefits — leverage, capital growth, rental yield, tax — alongside the costs that don't get the same airtime.
The case for property
Leverage: a $100K deposit can control a $500K asset. If the asset appreciates 5%, you've made $25K on your $100K — a 25% return on capital. Few other asset classes give retail investors that ratio.
Tax efficiency: interest on the investment loan, depreciation on the building, and most holding costs are deductible against rental income (and other income, if negatively geared). Long-term capital gains are taxed at half the marginal rate after 12 months of holding.
Forced savings: a mortgage acts like a high-commitment savings plan — you pay it off whether you feel like saving that month or not.
The case against (the part finfluencers skip)
Illiquidity — you can't sell half a property to fund a medical emergency. Concentration risk — one property is one suburb in one city in one country, all correlated. Holding costs — strata, council, water, insurance, agent fees, R&M, vacancy — typically 1.5-2.5% of property value per year, eating most of the gross rental yield.
Negative gearing only works if your other income is high enough to absorb the loss. Property is a cash drain in years 1-5 of typical investments — calculate whether you can fund that out of salary.
Who actually does well
ATO data on rental properties: roughly 70% of investors own a single investment property and net under $5K profit/loss per year. The wealth-building image of property investing is concentrated in a small minority who scale to 5+ properties over 15-20 years and time the market well.
Put this guide into action
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