If you have downloaded and read a copy of our free eBook ‘9 Step Guide to Property Investment Success’ or if you have attended one of our free property investment seminars, you would have a fair understanding of why we consider property to be the best investment choice.
If not, I have taken a few minutes to outline below why property is one of the most trusted investment choices by everyone from first-time investors through to major corporations and superannuation funds.
1. It’s tangible.
If you own shares the only proof of ownership is on a piece of paper or on a computer screen. However, if you invest in property you have something tangible to show for your money that can be seen, touched, customised, renovated or lived in. Even if you buy off-the-plan, the land exists and the building shouldn’t be far behind!
2. Property has a strong track record.
Australian residential investment property has historically produced sound returns and has created more millionaires than any other type of investment. Without a doubt the property industry experiences positive and negative cycles but if you invest for the longer term, there are significant rewards to be found.
3. It’s easy to understand.
Investing in property is relatively simple and the same fundamentals apply to properties everywhere – unlike shares where you will need to research and have a solid understanding of companies and industries you know nothing about. Although you should never invest in property without doing your research and due diligence, investing in property isn’t rocket science and is achievable and realistic for anyone. Plus, if you enlist the support and guidance of some property investment experts, the process will be as easy and hassle-free as possible.
4. It can be less volatile.
Although the property industry and prices will experience both good times and bad, investing in property is generally considered less volatile that other forms of investment. Your investment may decrease in value during an economic downturn but you can’t sit at a computer screen and watch the value of your property decrease by the minute or have thousands wiped off the value of your property in a space of hours like you can with shares. Property takes longer to buy and sell, unlike shares which can be sold with the press of button. There will always be demand for land and housing but if your shares plummet in value, they are barely worth the piece of paper they are printed on.
5. It’s easy to finance.
Banks and financial institutions prefer lending money to investors for property more than any other type of investment because it is proven to be the safest. Plus, their terms for property investment are often more favourable for property than for other forms of investments or assets. If you default on your loan, the bank has a property to repossess and sell to recoup some of their losses – this is something they cannot do with shares.
6. You can leverage property to reinvest.
Lending institutions are more favourable towards property investment plus they will allow you to leverage your property to reinvest. For example, if your investment property increases in value and is worth $750,000 but your mortgage is only $650,000, the bank will often allow you to use the equity in your current loan as a non-cash deposit to purchase another property. This is a fast and feasible way to grow your portfolio without having to continually save sizeable cash deposits. However, it is important to always investment wisely to ensure your finance or borrowings are never in jeopardy.
7. You can earn rental income plus capital growth.
Unlike other forms of investment, if you own an investment property you can benefit from the increase in property value over time (ie. capital growth) plus receive a regular rental income from day one. This ensures you are always receiving a return on your investment and every little bit helps when it comes to making sure you are meeting your financial obligations.
8. It provides multiple investment options.
If you buy an investment property, it is not just a matter of sitting back, crossing your fingers and hoping it will increase in value. There are multiple investment strategies available to you providing more flexibility than many people realise.
When it comes to property investment, there are many options to weigh up such as what type of property to buy; how much to borrow; where to buy; whether to subdivide and redevelop; if you should buy established, new or off-the-plan; chase cash flow or capital growth; rent furnished or unfurnished; as is or renovated… the list goes on. Every choice provides investors with a different set of opportunities and outcomes but the greatest benefit is that you can choose an investment strategy that is best suited to you.
9. There are incentives to invest in property.
If you purchase property you may be eligible for a number of rebates, grants and incentives which can help to reduce the cost of your investment. These incentives are usually available from the Government is most Australian states or territories or the developer. They may come in the form of cash rebates, stamp duty rebates, fencing or landscaping packages, home entertainment packages and more. These incentives have the potential to save you thousands of dollars (putting you ahead from day one) so it always pays to do your research!
10. Property investment can provide tax advantages.
There are many tax benefits available to property investors which allows you to reduce the amount of tax you pay each year. These benefits are in the form of deductible expenses such as interest repayments on your investment loan, depreciation, repairs, fees, maintenance, travel and more. Not only can property investment provide capital gain benefits in the longer term, it can also provide tax benefits each year.
11. You can make improvements to increase its value.
If you own an investment property, you have the option to make improvements to your property which can increase its overall value and potentially the amount of rental income you receive each year. The trick is to make sure you don’t over-capitalise and only make improvements that have the potential to make you more money, without costing a fortune.
12. Property can provide long term financial security.
As previously mentioned, property investment has made more millionaires than any other type of investment but it doesn’t exist without risk. The thing to realise is that with the risk comes the reward and if you don’t look at other ways to build your own financial wealth, your income will never exceed what you take home from your job each week.
Property investing allows you to save money in the form of tax benefits, you earn regular rental income plus you benefit in the longer term if your investment property increases in value. Let’s say your investment property increases in value by $300,000 over a seven year period, this is money you will have access to that wouldn’t have been possible if you didn’t make the initial decision to invest. Property investment can provide long term financial security but only you can make it happen.
If you would like to know more about why property is the best form of investment, contact an Investor Assist Property Investment Specialist here and one of our team will be in touch for an obligation free discussion. There has never been a better time to start building your financial security through property so don’t delay!