Why property is the best investment

We work hard to earn our income and we are all very careful how we spend it. Many successful investors spend a little and save a little. In modern times, we are spoiled for choice when it comes to investing. Why does property investment remain the most popular? Is property the best investment?

Let’s explore the basis why property investment is widely the most popular in Australia.

Millionaires love property investment

Taking note of the last BRW Rich List 200, property has consistently been an influence of wealth creation in Australia. Some of these individuals haven’t generated their initial wealth from property, but have added to their wealth with substantial property investment. Observing their success and emulating it within your own capacity seems practical to many.

Property investment is available to all

We’ve noted that highly successful investors in Australia have further benefited from property investment. However property investment is available to everyone. You don’t have to be wealthy to accumulate it… With a cash budget in place, low interest rates and the ability to borrow up to 95% into residential property, property investment is available to many Australians. With the help of a property adviser, you can implement a plan. You don’t have to be rich to be a property investor.

Regular income through rent

The rental income you receive from your investment property provides a regular monthly income stream. Regardless if the property experiences capital growth or not, it will still earn income. The income can be used to support your lifestyle or reduce your debt. How good does that sound?

Overtime with the view of inflation, you may get plenty of opportunity to increase the rent. With an increasing population, this is inevitable.

Its also worth noting not all property is equal. Location and property types can influence the level of income you can generate. For example, inner city locations generally have a higher rental demand to outer suburban areas.

Tips on increasing your rental return, check out our article HERE.

Property security

When comparing property investment to other assets such as bitcoin, currency exchange, derivatives and shares, property investment has a better level of security as it retains lower risk and demonstrates less volatility.

Looking at these other forms of investment, many have gone bankrupt… Can you recall when a property has gone bankrupt? Even the largest companies in the world have gone insolvent. The owner of a property may go bankrupt, but a property won’t!

Have you noticed that banks will borrow you $500,000 to buy a property? How many people have you met be approved to borrow that amount to buy a share portfolio? The banks have borrowed more money towards first class mortgages secured against a property than any other form of security.

Consistent capital growth

It’s said that the Melbourne & Sydney property markets have doubled in value every seven years. This pattern of capital growth has been recorded over the last 45 years.

Not every year witnesses capital growth. There are years when the property market will be flat while other times it will decrease in capital growth.

With professional advice you’ll experience more positive capital growth than negative. However the volatility on an average yearly basis is moderate compared to other forms of investment.

The key to a successful property portfolio is taking a long-term outlook. A long-term strategy of holding your portfolio will be capture the capital growth we all want.

The ability to borrow money to buy

As highlighted earlier, not all investments can be used to secure a loan. One of the significant benefits to property investment are banks having a great appetite to borrowing money towards it.

This allows many investors the opportunity to collect enough funds to buy a property.

Investment control

When buying an investment property, the control and flexibility is quite high in comparison to other asset. You have the ultimate say in how you want to buy and hold it. You can control the following:

What you are buying and how much you are willing to pay
When you are buying the property
When you are selling the property and for how much
Who will be renting the property and for how long
How much you’ll charge in rent

The investment control also allows you to invest against the market. Some buyers maybe selling for under market value, but you don’t have to follow the trend. You can hold your ground and sell it higher or simply holder it longer until the market suits you better to sell.

Tax Benefits

Property investment is a very rewarding asset. We have the ongoing income through rent, we have capital growth through the the increase in value over time, but we also get tax benefits for owning one.

To learn more about the tax benefits, check out our article HERE.

These tax benefits can improve the cost effectiveness of investing. These tax deductions can potentially reduce your tax liabilities while improve your cash flow.

Is property the best investment?

We understand property investment isn’t for everyone. As we all require a home to occupy, we can all appreciate property is an incredible asset. It is a very successful way to becoming financially independent and demonstrates so many reasons why it is the best investment. If you want help looking to invest in property, please feel free to contact us.

www.crestproperty.net.au

While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.

December 2018