(03) 9020 2905Oh, no, no, no! That’s not the right question. Try these.
Would you rather cycle across town … or take a chopper? Do you want to holiday at home … or in strange/exotic foreign locations? Would you rather eat toast … or phantasmagorical street-vendor food in Phnom Penh?
Bikes, downtime at home and toast are great and relatively safe. Helicopters, overseas holidays and dodgy street grub bring the risk of death, death and, um, food poisoning that could kill you, but are potentially more fun.
Property trusts and direct property ain’t in the same ballpark. Sure, they’re both property. And Stefan Dennis and Sean Connery are both actors. Thpppppt! But the similarities end there.
Property trusts are pooled investments that are often ASX-listed entities. They’re a hands-off investment from a management perspective that can be bought in small parcels and sold easily.
Direct residential property comes in minimums of $300,000 to $400,000 lots, requires you to take ultimate management control, even if you delegate some responsibility to a property agent, and takes months to sell.
And gearing to the hilt is an almost essential element of direct property investment.
What do I prefer? Both. They’re both great assets. We have geared residential property outside super and property trusts inside super. But that’s because that suits us and our appetite for risk.
For you? That depends on what sort of a risk-taker you are. Direct property is inherently more financially risky, because of the gearing, but can be more financial rewarding. Property should be in your investment and super portfolios. It’s just a matter of what and how much.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.