Why Invest in Residential Property
I like Real Estate because it is a rock solid investment. Property Investing in Australia can also be simpler to do as a long term investment plan than any other investment vehicle I know.
I don’t include superannuation here as “Super” is a savings plan and not an investment.
There are very few assets you can own where you can be almost 100% confident that your investment will never be worth nothing. A notable exception here is the Sub Prime Mortgage crisis in the United States starting in 2006, the effects of which we are still feeling today.
Over the last 70 years in Australia, residential property (on average) has doubled in value about every 7-8 years. This can be verified at the Real Estate Institute of Australia website http://www.reia.com.au.
There is no reason to believe that this will change trend will change anytime soon.
There are ups and downs with any investment market, property is no different. Long term though, property always does well.
The reason is a little clearer if we peak behind the veil. Remember it is not only the value of assets like property increasing over time. Property also serves as a strong hedge against inflation.
Inflation, in effect reduces the spending power of your money, it devalues it. Property, Real Estate can help prevent this.
The power of investing in property comes chiefly from OPM, Other Peoples Money.
This OPM gives you the ability to leverage and therefore multiply your return on your investment dollar.
The reason you can do this is that the people with the money, the Banks, love real estate. They love Property so much in fact that they are willing (with a little coaxing) to lend you 80% to 90% of its market value.
That said, if you have owned your own home for a number of years you can go one better than this and borrow 100% of the value of your investment property. This includes all the costs (stamp duty, loan fees, conveyancing…) of doing business.
This usually takes more than one lender to do. And it can be… tricky if you are new to this type of multi lender, multi loan finance structure. If your interested my next article will cover this in more detail ;-).
Another thing I like about Property Investing is it is simple. In the words of Robert Kiyosaki “Property Investment is as Dumb as Dirt” – end quote.
I think he is right. When compared to learning how to understand stocks and shares, or becoming an eBay Millionaire, investing in property is very simple. And it can also be hands off too.
Over the next few weeks, I will try to answer the questions that I have been asked by clients investing in property.
I will outline how I structure Multiple Loans and Multiple Lenders when investing in property for the first time. And I will demonstrate how to borrow 100% of what you need to buy your first investment property while doing so.
From there we will go into how your investment will be funded into the future without keeping you broke.
We will go through the best way for you to find a bargain investment property in any kind of market. This is a must.
We will also discuss your business partners in your investment property, your tenants and your friends at the Australian Tax office.
Check back again soon
Jamie Wadley – HunterWide Home Loans
