Why is property a better investment strategy?
Updated: May 27, 2022
Property investment is arguably one of the safest investment strategies to exists. While it takes a long term approach, it offers vast benefits and stability for investors. We're going to share some of the most common benefits of property investment below.
Buying an investment property allows you to leverage
Leveraging is a process of using money that's borrowed to invest. In most cases when investing in property, banks will lend you up to 80% of the property purchase price. 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's a high rental yield associated with the property. This can contribute to a healthy investment income.
Property investment holds less risk
Generally, real estate investment carries fewer risks than stock market investing. When looking at stocks as an investment option there's higher potential for economic and risk. This is because share prices tend to fluctuate daily.
Beacause property's a physical asset it's unlikely to depreciate at a similar rate to stock markets. In fact, property value tends to appreciate over time.
Buying an investment property comes with tax advantages
As explained in a previous blog, you can expect to save more money from property investments due to the tax benefits it offers. When tenants occupy your property, you're able to claim on yearly tax deductions for that property. Some of the deductions that you can expect to claim 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 claimon your investment property, click this link.
You have greater 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 your home loan, 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.
Thinking about buying an investment property?
Property investment is the greatest source of wealth produced by many of Australia's multimillionaires.
Real Estate Investment Finance 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 40 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
We explore this topic in our eBook 'Building Wealth Through Property.' Check it out here for FREE!