Peter Gianoli gives ten reasons to get involved with property investment. See what he had to say on the advantages of obtaining an investment property.
Transcript: Peter Gianoli's ten reasons to get involved with property investment
Hi, this is Peter Gianoli from Investor Assist and welcome to our series of videos on investing in property. In this video, we're going to outline the top 10 reasons to invest in property.
Reason number one, property has made more millionaires than any other investment. In fact, property millionaires have been created at the rate of more than 58,000 a year since 2001. By 2010 there were around three quarters of a million millionaires through property in Australia and by 2020 the number of millionaires is projected to be 1.9 million people all via property.
Reason number two, anyone can do it. You don't require degrees or training. We've all heard stories of people who left school at 16 to go to work. And wisely, they invested every spare dollar they had into real estate. Over the years they've continued to do this practice and bit by bit their property portfolio has expanded to be the envy of their more educated peers. Window cleaners, butchers, bakers and even candlestick makers. Property does not discriminate and the benefits can be enjoyed by all.
The third well known reason for investing in property, security. Houses don't go broke. There are two clear categories in our population, we have renters and we have home buyers. When there are more people looking to rent, rents are driven upwards and when there are more people wanting to purchase a home, house prices trend upwards. For an investor the total return, which is capital growth plus rental yield, should remain relatively constant. And this is why housing is a low-risk investment which provides consistent returns over time. As opposed to other investments where the revenue is driven by those who are or are not actively participating in the market, housing differs because everyone more or less is in involved either as a renter or as a tenant. And in this fashion the market remains constant with activity.
Reason number four, income that grows. Over time the rental income you'll receive from your investment increases. With home ownership on the decline in Australia, there is an increasing pool of tenants needing to rent properties which ensures that rents will continue rising.
Reason number five, consistent capital growth. Well located residential property has an unequaled track record of producing high and consistent capital growth. Due to our population growth in Australia, this trend will continue as it has done since the time of federation.
Reasons to invest in property number six, you can buy it with someone else's money. Not surprisingly lenders regard residential real estate as a prime security for loans. This means you can use the bank's money to help you buy your investments. The great news is that the banks don't share in any of the capital growth of your property and this increased equity will be all yours.
Number seven, you're in control. Unlike other investments direct ownership of property allows you to make all the decisions and have direct control over the returns. You can choose who you rent your property to, if you want to renovate it, how involved you'll be in its upkeep and whether you look after it yourself or choose a property manager. The choice is yours.
Reason number eight, insurance. There is a great deal of security knowing that you can insure your building and contents. And that's not all, there is also the option to insure your rental property for loss of rent and damage caused by tenants. This insurance product, called landlord's insurance, offers piece of mind.
The ninth reason for investing in property, tax benefits, namely depreciation allowances and negative gearing. Depreciation is something that is often misunderstood and therefore people do not always reap the financial benefits that are available to them. Depreciation can be claimed on all homes old or new, calculated over 40 years. Therefore if your house is 20 years old when you buy it, depreciation will be calculated on the remaining 20 years. If your property is a rental you can claim depreciation on the wear and tear of carpets, etc.
Repairs and improvements are the other two main categories considered by the Australian tax office. Repairs can be deducted, however improvements cannot. The option with improvements however is that you can claim them as a depreciation.
Regarding negative gearing, Australia is one of the few countries where negative gearing is an option. Negative gearing, the concept, is based on a person borrowing funds from the bank to purchase a property which they can then rent out. Income from the rent will usually be less than the interest paid on the mortgage combined with the cost involved in owning a property. As this setup is working at a loss, it attracts tax benefits. Negative gearing is a strategy commonly used by people for this reason in an effort to reduce their annual tax payments. So in effect, the Australian tax office helps you as a property owner own and pay for your investment property.
Reason number 10, you can add value by either renovating or refurbishing. Renovating is a smart way to add value to your home. People are becoming time poor and therefore buying a home that is already refurbished can be a real bonus for them. Even if you cannot spend large amounts of money on major renovations, styling is always an option. The greatest visual impact for the least outlay will always be a winner.
I know I promised you 10 good reasons to invest in property, but I'm actually feeling in a good mood and I've got two more good reasons why you should invest in property and at no extra cost.
Bonus reason number one, you don't need to sell it. Unlike most other investments, when real estate goes up in value you don't need to sell it in order to capitalise on that increase in value. You simply go back to your bank or mortgage broker and get your lender to increase your loan and this will allow you to use the extra funds to purchase whatever you like. Obviously we'd like you to purchase another investment property, but no one is going to hold you to that. The funds are yours to be used as you wish to do so.
Bonus reason number two, most forgiving investment. History has proven that if you're prepared to hold property over a number of years it's likely to increase in value. So even if you've bought the worst house at the worst possible time, if you have a long term view the chances are still good that it will go up in value and your investment portfolio will benefit as a consequence of your acquisition.
Thank you for taking the time to watch this video. This is one of a number of videos on our guide to investing in property brought to you by Investor Assist. If you'd like more information on investing in property please do not hesitate to contact us using any of the details on the screen. Thank you and good luck in your property investments. I'm Peter Gianoli from Investor Assist.
7 min 53 seconds
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