Ten Reasons to Invest in Property
- More people have created personal wealth through property than any other form of investment
There’s nothing wrong with seeing what successful people do and applying those principles to your own life. If the majority of wealthy people have used real estate to gain personal profitably, there is no reason why you couldn’t or shouldn’t also.
- Anyone can invest in property
Getting started in the property market via investing in existing property or building new property may be within your reach. Why? Banks are able to loan you up to 80% of the funds against the security of the property itself. That means that most Australian residents with a steady job and a sum of capital saved could be legible for a bank loan, and thus enter into the property investment market.
- Provides security
Residential property is a secure investment. Banks have always recognised property, and especially residential real estate, as excellent security. The reason they’ll lend you up to 80% of the value of your property is that they know property values have never fallen over the long-term. While property prices do fluctuate over time, affected by supply and demand, the large homeowner market will always underpin property values.
Another factor that adds to the security of residential property as an investment is that you can insure it against most risks. You can insure the building against fire or damage and you can insure yourself against the tenant leaving, damaging your property or breaking the lease.
- It’s an income that grows
The rental income you receive from your investment property allows you to borrow and gain the benefit of leverage. This also helps you to pay the interest on your mortgage.
Over the years, rental income has increased at a rate that outpaced inflation. Statistics show that Australia doesn’t have enough homes to accommodate the population growth which makes the rental market very lucrative to be invested in.
- Provides consistent capital growth
Residential property has an unequalled track record of producing high and consistent capital growth. Over the past 25 years the value of the average property in all capital cities has doubled in value every eight to 10 years. However, in the short-term the picture is much more uncertain and confused, and at times capital growth stops and even reverses. The better your property selection – where you buy, what you buy, how well you negotiate and how you finance your property investment – the better your returns could be. The key is to look at property investment as a long-term investment.
- You are in control
You make all the decisions when building the property and are in direct control over the returns from your investment.
- Gain tax benefits
Property investors are able to take advantage of a range of tax benefits including tax deductions and depreciation allowances such as negative gearing.
- You can add value to your investment property
There are hundreds of ways you can add value to your property, which will increase your income and your property’s worth.
- You don’t need to sell when the market value increases. You can simply gain leverage to borrow more from the bank and build/buy more investment properties!
Unlike most other investments, when real estate goes up in value you don’t need to sell in order to capitalise on that increased value. You simply go back to your bank or mortgage broker and get your lender to increase your loan to invest in another property.
- It’s a reliable investment
Even if you bought the worst house at the worst possible time, chances are that it would still go up in value over the next few years. History has proven that real estate is possibly the most forgiving investment asset over time. If you are prepared to hold property over a number of years, it’s bound to rise in value.
There really is no other asset class quite like property.
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