Why is Property a Better Investment Strategy?
Updated: Mar 9
Real estate investing is arguably one of the safest investment strategies to exists. While it is a long-term approach to wealth creation, it offers greater benefits and stability for those wanting buying an investment property. As property investment experts, we will share with you some of the most common benefits that you can expect from investing in this strategy.
The Ability to Leverage
Simply, leveraging involves using money that is borrowed to invest. When buying property the banks will generally lend you up to 80% of the property purchase price. At the moment, the lending rate is even better, with some banks willing to lend up to 90% for investors. Once you borrow this money to invest, you can make it work for you. This means that you can make more money than initially borrowed, especially if there is a high rental yield attached to the property. This can contribute to a healthy investment income.
Buying Property Generally Has Fewer Risks
Generally, real estate investing carries fewer risks in comparison to stock market investing. When looking at stocks as an investment option their is greater potential for economic and inflammatory risks as share prices tend to fluctuate daily. As property is a physical asset it's unlikely to depreciate at a high rate in comparison to the stock market. In fact, property value tends to appreciate over time. Which means that rental prices increase too and a high rental yield can contribute to a healthy cash flow back into your pocket.
Buying an Investment Property Has Tax Advantages
As explained in a previous blog, you can expect to save more money from real estate investing due to the tax benefits. When tenants occupy your property, you are able to claim on yearly tax deductions for that property. Some of the deductions that you can expect to claim back on include; advertising, rates, interest expenses, repairs and maintenance, agents fees, investment property depreciation, and many more.
To see what sort of tax deductions you can claim back from your investment property, click this link.
Access to Equity
Buying an investment property allows you to build equity. NAB defines equity as "...the difference between the market value of your property and the amount you still owe on your home loan." Once you pay off a certain amount of the loan on your property, the value of it will increase. This means that you may have access to equity, which can then be used as a steady cash flow, and/ or to be used to purchase more investment properties and build your property portfolio.
Interested in Buying Property as Your Investment Strategy?
Property investment is the greatest source of wealth for many of Australia's multimillionaires. Don't believe us? Check out Michael Yardney's Property Update. In this article, Yardney explains that most wealthy people create their wealth through real estate.
Our team at REIF is comprised of highly specialised finance and property specialists that can assist you to create your property investment strategy. We have access to over 10,000 properties and work with over 25 lenders to help ensure that we can individualise your property investment needs and make your strategy work for you.
If you want to discuss your property investment strategy, purchase your first home, or to compare and review current interest rates, we can help.
Reach out on the details below:
1300 130 932