Why invest your money in property
One thing that all successful investors have in common is that they all invest in more than one income stream.
The objective is obviously to achieve financial freedom. And it’s not just people who own big businesses or CEOs that can afford to do this. Pretty much anybody who is financially savvy is able to achieve financial freedom and create wealth for their children and there are many different investment vehicles, but we believe that investing in real estate is one of the most secure pathways for you because you can create long term wealth with a physical asset.
Choosing to invest in the build of new build properties is going to enable you to rent these out for a profit. The mortgages and the costs for that property can take care of themselves through the medium of rent if you choose to invest in stocks and shares. You’ll still find money flow, but at the end of it you don’t have something you can then sell.
With a property, you can rent it out and then sell on later in life for a bigger profit, and then you can either choose to reinvest in more property or you can choose to keep the cash and enjoy your newly financially free life. Let’s take a look at why you should invest your money in property.
For leverage purposes
Did you know that if you invest in property, you can leverage your money easily from the bank?This is compared to other investment vehicles such as stocks. Usually banks can only lend up to 65% of the value of investment shares, and typically they only lend up to 70% for the value of a commercial property. This means that a residential property is an appealing financial vehicle for building wealth.
It’s a tangible asset
Property is an asset you can touch. When you invest in the property you own an asset that is physical and tangible. This means you can physically touch and see this property, which is different to shares or companies. Having this asset provides you a sense of security and assurance that no matter what happens, you will always have a roof over your head.
It’s an easy and safe investment
Investing in real estate can be done by anybody. With the right research and assistance, you can always enjoy the benefits that investing in real estate can offer. Choosing the right property will enable you to take advantage of this investment vehicle with lower risk but higher gain. You can even enjoy a weekly passive income without too much involvement, especially if you hire a property manager to manage a property for you.
Deductions
Choosing to invest in real estate also grants you several different tax benefits. Depreciation is a good tax advantage because as a property ages, the structure of the property is subject to wear and tear. A cost segregation study can further enhance this benefit by identifying specific components of the property that depreciate at an accelerated rate, allowing for larger deductions in the earlier years of ownership.
Because of this reason, many people who create wealth choose to invest in real estate primarily because they can claim thousands of dollars every financial year. As an investor, you’re able to claim the depreciation from this.
Negative gearing
With property you get the benefits of negative gearing. When your rental income doesn’t cover all of your expenses, it means that your property is negatively geared. Any money that you lose in your investment property can be claimed back against the tax that you pay, and this is important to work with your accountant to ensure that you can claim back all of your losses.
Equity
When you invest in a high growth region, your property is going to increase in value overtime and you’ll create a growth gap between your property value and loan amount owed. This growth value is called equity and it’s something that you can touch on when you need it.
Lenders will allow you to access equity and cash out up to 80% of the property value from your bank and use your next investment property. Investment property lenders are key players in assisting you in using this equity to increase the size of your real estate portfolio. This is how investors tend to go from owning just one to expanding a portfolio of properties.
You get a chance to bring in some cash
You always have a source of income if you invest in real estate. It’s a great way to have a passive income, but if something happens with your job, you then have a fall back in case you need to take some time off. Most successful investors will only spend their passive income on luxury items, and this means that their investment vehicles are always providing them with added wealth.
You can diversify
And finally, when you invest your money in property, you are diversifying from something else. This allows you to minimize your overall investment risk.
