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.

Mt Druitt - St Mary's Standard (East) - - REAL ESTATE -

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.

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