Why Invest in property
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When it comes to strategic long term investment we believe that there is no better investment vehicle than direct property investment.
The other options are shares, banks and superannuation. Let's address some basics to compare apples with apples.
Risk Analysis
With your money in the bank it is a very low risk and your funds will always be available. With Shares and to degree superannuation, they are considered high risk investments, your money can be here today...gone tomorrow. You could make money steadily over many years only to see something happen on the other side of the planet crash the market overnight.
Property on the other hand is considered a low risk investment. The phrase "safe as houses" didn't come from nowhere. Your property will always be of value, you can insure it against loss or damage and unlike all other forms of investment your tenants will be paying a large portion of the borrowed funds.
Liquidity
Liquidity refers to the ease of which it is to sell your current investment, should you need to do so.
Shares are very liquid and with the advent of the internet you can sell your shares in a matter of seconds.
Superannuation is a little different. You cannot access funds in most circumstances until retirement.
With banks if you have a general savings account, you are free to access your money at any time. However, if you have invested in a fixed term deposit you will be required to wait a certain time or your gain will be reduced.
Property is always in demand and although we promote a long term hold strategy, given the right product and location, selling will always be easy. A back up plan with property is the leverage factor that other investments don't provide.
If you need cash in a hurry and don't want to sell, you can use the property as security and gain access to its equity. No other investment offers this opportunity.
Capital Growth
Growth in banks is always a fixed rate and because of this your gain is limited to approximately 5% per year. Shares and superannuation, depending on the products invested in, can provide strong returns but as highlighted above can disappear overnight as has happened more recently.
Property over the long term has provided Australians with significant wealth creation opportunities. In fact, in Melbourne, property values have doubled every ten years for a number of decades. Property experts believe the current fundamentals we have that affect property such as employment, immigration, population growth and interest rates suggest a very healthy property market for a long time to come.
Tax Advantage
Australia's wealthiest man Kerry Packer once said, "Any Australian who does not attempt to reduce their tax is a fool".
However there are very limited tax advantages to either shares or placing funds in to a bank and superannuation issues do not present themselves until retirement.
Direct property investment however utilises special taxation laws devised to assist investors, stimulate the construction industry and assist the growth of the economy.
Unlike any other form of investment, property allows you to reduce your tax each and every week and divert these funds into your property investment mortgage. When you combine these funds with the rent you receive, you can start to build a picture of how little money it takes to own an investment property.
Control
With Shares, Superannuation and money in the bank you have no control over the short and long term growth and management of your investment.
You can't ring the Board of a company you invest in and demand better returns. You can't call the bank and ask for a better interest rate on your funds because they announced a record year in profit. You are limited to becoming a spectator on the one thing that can change your life.
Property on the other hand offers total control. You can choose the location, the design, the tenants, the quality absolutely everything. You can add value at anytime and increase your equity position by as simple a thing as creating an undercover deck.
No other investment will place you in a better position of control that property.
