Today’s success tip comes from Michael Yardney.
As a personal investor and developer, Michael is a leading real estate commentator and is a regular columnist to numerous property magazines.
Why should people invest in property?
There are many ways to become wealthy but for the average Australian property is the ideal vehicle with the best rewards for the least risk. Let’s look at the twelve reasons why I believe every Australian should consider property as their pathway to financial independence.
1. Property has made more millionaires than any other type of investment - According to the BRW Rich 200 list (published annually) property has consistently been the. And it’s the same all over the world. So why fight it? If it works for them, why try to look for a better way?
2. Anyone can do it - Currently, the banks are keen to find new customers. They will lend you up to 90%, sometimes even 100%, of the value of a property. This means that most people with a reliable job and a little capital behind them can afford to buy an investment property.
3. Security - While you often hear of companies losing money, you never hear of houses ‘going broke’. And despite the ups and downs of the real estate market, in the long term the value of well-positioned properties has doubled every seven to ten years. Would banks be lending you up to 90% of the value of your property if they did not recognise it as being a safe and secure investment?
4. Income that grows - Over time the rental income you receive from your investment increases. With statistics showing the level of homeownership on the decline in Australia there is an increasing pool of tenants needing to rent properties, which ensures that rents will continue rising.
5. Consistent capital growth - Well-located residential property has an unequalled track record of producing high and consistent capital growth. With increasing demand for certain types of property, due to our population growth, this trend will continue as it has done from the time of Federation.
6. You can buy it with someone else’s money - Due to its history of security, its stable income and its proven capital growth, residential real estate is regarded as prime security for loans by lenders. [[This means you can use the bank's money to help you buy your investments.]] And the great thing is that the banks don’t share in the capital growth of the property - this increased equity is all yours.
7. You are in control - Unlike other property asset classes, property allows you to make all the decisions and have direct control over the returns. You can choose who you let your property to, if you want to renovate it, how involved you will be in its upkeep and whether you look after it yourself or choose a property manager.
8. You can insure it - Unlike many investments you can insure many of the risks associated with property investment. Not only can you insure against the building and its contents being damaged or destroyed, you can also insure against loss of rent and damage caused by the tenant.
9. Tax benefits - Property investment creates the potential for significant tax benefits such as deductions, depreciation allowances and negative gearing.
10. You can add value - There are hundreds of ways you can add value to your property which will increase your income and the property’s value through things such as renovations and refurbishment.
11. You don’t need to sell it - Unlike most other investments, when real estate goes up in value you don’t need to sell in order to capitalise on that increased value. You simply go back to your bank or mortgage broker and get your lender to increase your loan.
12. Most forgiving - History has proven that if you are prepared to hold property over a number of years, it’s bound to increase in value. So, even if you bought the worst house at the worst possible time, the chances are still good that it will still go up in value.
This website contains even more great tips from Michael Yardney.
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