Investing in property is becoming increasingly popular and it is no wonder. Real estate has several benefits over other types of investments, and the market has continued to strengthen since the passing of the global recession.
While many investors have decided to put all of their eggs in the property basket after discovering how safe and lucrative it can be, others are still a little frightened at the prospect. If you are unsure, it will not hurt to test the waters by using property to diversify your existing portfolio.
Property Is a Secure Investment
Financial analysts across the nation have been saying for several years that property is one of the most secure investments that can be made. The market has been experiencing steady growth, and over the long term, real estate has always been a solid investment.
This is not only opinion. Banks are reinforcing this fact with their willingness to write equity loans for up to 90 percent of a home’s value. They would not be doing so unless they knew that they would still make a profit should the loans go into default.
Over time, property is one of the most forgiving assets that you can own. Even a low-quality home purchased in a bear market will eventually rise in value to provide you with a healthy profit, and there is no other investment that runs through these steady cycles.
Steady Income and Capital Growth
When you invest in property, you can earn money in two different ways. The first method is through rental income, and the second is through capital gains. Property works best as a long-term investment, but while you are waiting for the right time to sell, your property can provide you with a steady stream of positive revenue by bringing in tenants.
In many areas, rental properties are higher in demand than homes for sale are, and once you purchase the property, the amount of work you want to put into it is up to you. You can hire a professional property manager to take care of the details and still make enough money to realize a strong return.
Property has experienced unparalleled growth over the past 30 years even through the ups and downs of the national and global economies. In Australia, the average property has doubled in value every 10 years, and in some cases, the value has doubled in eight years or less. However, you must be prepared to stick it out through short periods of slow or negative growth until the market begins to take off again.
Instead of traditional investments, such as interest-bearing savings accounts that only provide returns of 1 percent to 4 percent, you can invest in property to earn more money for your retirement or any future objectives you may have.
A Tangible Asset That Leaves You in Control
Property is a great investment because it is more than simply abstract numbers in a book or stockpiles of commodities in unnamed warehouses you will never see. It is a real and tangible asset that you can see, touch and experience. Longtime property investors will tell you the same thing in conversations concerning their favorite investment asset. Property is a strong anchor in any investment portfolio because you can feel a physical connection to it and inspect its condition.
Because property is a tangible asset, you have direct control over every aspect of buying, selling and management. If you want to increase your revenue, you can remodel or upgrade the building to demand higher rent, and this will also increase its capital value. In addition, through finance, you can make a larger investment by purchasing property than you could with other types of assets, and you can leverage your equity to make additional investments.
Tax Advantages of Property
Investing in property also provides several tax advantages that are not available with other investments. One of the greatest of these benefits is the ability to deduct the interest you are charged by your lender, but you can also deduct nearly any expense that is incurred by operating and managing a rental property. These may include several items, such as travelling to the property for inspections or to collect rent, the fees you pay to a property-management company and depreciation of the building.
You Are Not Alone
If you do not understand the nuances of property investment, you do not have to enter the market blindly. Experienced real estate specialists and investment agents are prepared to help you get off the ground and guide you to success.
Author: Julian Sutherland
Julian Sutherland is an International real estate agent based on the Gold Coast, Queensland, Australia, servicing the Asia Pacific Region.