Bricks and mortar a solid investment
Property makes a great wealth creation strategy because the government and banks support investment in real estate and it leads to benefits beyond financial rewards.
YOU can’t go past property when looking for a profitable long-term investment.
I’ve been investing in property since the age of 22 and during this time I’ve learned that the benefits of property investment far outweigh other investments such as shares and business.
Property is a solid basis for any wealth creation strategy. It is a safe asset that doesn’t bounce up and down in value and it will never be worth nothing – it is solid bricks and mortar, and land.
Here are my top five reasons for investing in property rather than other investments.
Property is easy to understand.
With property, we all live in one, were brought up in one and many people have rented, bought or sold one.
You may not know the specifics about exactly what, where and when to buy just yet, but if you stick to a few simple rules of buying close to cities, work, transport, leisure and water, you probably won’t go too far wrong.
This is unlike other investments such as shares, where it is easy to invest poorly and lose a lot of money quickly. Property leverages your time. Property is one of the most passive investments you can buy. This is great if you value the limited time you have away from work.
It takes some time and skill to find and negotiate each purchase, but once the property has been bought, it takes very little time to manage on an ongoing basis.
In fact, if you invest well, property can start to make more money than your 9-5 job, freeing you up to work less and have more time on your hands for family, friends and hobbies. Property is safe. When investing in an asset, there’s nothing more solid than choosing one that the government and banking system fully support.
The banks are so heavily into property they have to make it work or their whole lending system collapses. The same goes for the government that has to keep property within reasonable bounds because if every borrower was forced on to the street, the national economy would collapse, the government would fall and who knows what the international consequences would be.
Property leverages your money.
One of the great advantages that property has over other investments is that you can leverage your money five to 10 times fairly safely.
High-income earners buying their first few properties will often be able to borrow 90 to 100 per cent of the funds from the bank.
Investors tend to borrow 80 per cent when building a large portfolio and those who are nearing retirement might reduce their borrowings to 40 to 50 per cent or less.
So for each $200,000 you have to invest, you can typically buy a $1 million property that might grow at a rate of $70,000 to $100,000 a year.
You might need to tip in some cash each year to balance the rent and mortgage payments, but that’s probably a fraction of what you earned in capital growth. Property is stable. Most property owners are unaware of their property’s exact value on a day-by-day basis and therefore don’t panic as shareholders might in a volatile market. — Chris Gray is host of
on Sky News Business and chief executive of
buyers’ agency Empire
Property investors enjoy knowing their assets are stable and safe.