WHY INVEST IN PROPERTY? There is no time like now. There are numerous reasons why you should invest in property and as the old saying goes ‘there is no time like the present’. Regardless of what the property market is doing, there is never really a bad time to invest because if your strategy is sound and you are investing for the long term, there are many advantages and benefits to be found.
WHY INVEST IN THE PROPERTY MARKET? "There is no time like the present"
There are numerous reasons why you should invest in property and as the old saying goes ‘there is no time like the present’. Regardless of what the property market is doing, there is never really a bad time to invest because if your strategy is sound and you are investing for the long term, there are many advantages and benefits to be found. They include:
Property has made more millionaires than any other investment
In Australia, more than 58,000 millionaires have been created each year since 2001 via property investment and by 2020, this number is expected to grow to close to 2 million millionaires.
It is hard to compare property to other forms of investment because property performance can vary significantly depending on location and property type. However, research conducted in June 2011 showed residential property investment achieved the highest return of 10.1% pa and 11.6% pa respectively over ten and 25 year periods. This compared favourably to Australian shares, which returned 8.4% pa and 10.8% pa over the same periods.
Research has shown property to be less volatile than shares. Volatility is a measure of how much a price moves over time. Less volatility is typically good since returns are likely to be more stable. The benefit of low volatility for property investors is that, while shares rise and fall by the minute (and even alter in price drastically overnight), property typically rises or falls in value gradually.
Anyone can do it
You do not need any training, degrees or formal qualifications to be a property investor. You can be a baker, plumber, artist or teacher plus you can also be a property investor.
Invest with someone else’s money
Lenders consider residential property as a prime security for loans which means you can use the bank’s money to buy your investment property but any increase in property value is yours to enjoy and does not need to be shared with the bank.
Leverage to borrow
Banks will typically lend much more to someone buying property than buying shares. Investment properties can be purchased at 80% LVR (loan to value ration) or up to 90% LVR with mortgage insurance. And if you already own your own home and have a reasonable amount of equity in it, you may not even need a deposit.
Earn rental income plus capital growth
Ongoing rent from tenants can help you service your loan repayments, whilst capital growth (created when the property rises in value) can provide gains when you sell the property or you borrow against the equity in the property whilst you still own it.
Property is a low risk investment which historically has provided consistent returns over time. If there is increased demand for rental properties, your rent will be driven up which is of benefit to you as an investment property owner, or if demand for housing increases, it will drive up the price of your investment property which is also good news for you. Regardless of whether renters or owner occupiers are driving the market, it will have a positive outcome for your investment.
Consistent capital growth
Well located residential property has an unequalled track record for producing high and consistent capital growth.
You are in control and you can make all the decisions
When you buy an investment property you are in control and you make all decisions. You can decide how quickly you repay your loan, what type of house you want to buy or build and where, who manages your property, which tenants live in the house, what improvements you make to your property and when you decide to sell it.
You can insure your investment by taking out building and contents insurance. You can also get Landlord’s insurance to protect yourself in the event your tenant fails to make rental payments.
Property can provide tax advantages when the cost of owning the investment exceeds the income. Tax advantages alone are not a strong enough reason to invest yet they can provide a strong incentive as part of an overall investment strategy or portfolio.
Add value by renovating or refurbishing
You can exert direct control over your investment by making improvements to the property. This can increase the appeal and add value to the property and you can save yourself money if you are able to do the improvements yourself. Just make sure you know what you are doing!
You don’t need to sell it
One benefit of owning an investment property is that you don’t need to sell it. If you want to utilise any capital growth or equity in the property, all you need to do is go back to your back and you can borrow against the property allowing you to increase your property investment portfolio or diversify your investments into other areas.
Most forgiving investment
Historically property investment is one of the most forgiving types of investment. Even if you buy the worst possible house in the worst possible street at a bad time in the market, generally speaking it is hard to go wrong and if you have invested for the long term, your property should still increase in value. It just may take a little longer.
There are many different property investment strategies but the most important thing is finding a strategy that is right for you and appropriate for your individual circumstances. Don’t worry about whether or not it’s the right time to invest because there are always sound property investments to be found if you do your research and make smart decisions. And if you need a little expert advice along the way, an Investor Assist Property Investment Specialist is always on hand to help.
DISCLAIMER:This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.