Real estate is the cornerstone of the world’s great fortunes. It has created more billionaires than any other asset class. In the recent Forbes Billionaire’s List, it reported that a total of 135 property tycoons now make up the world’s wealthiest list.
Some Gold Coast areas have had periods that have seen many home owners with properties that have, in some cases, doubled in value over a short period of time.
While there is no guarantee your property will gain in value over any given period, and capital growth largely depends on where and what you buy, historically real estate experiences steady growth over the long term.
History has shown that property located within 2 to 10 km’s of the CBD should follow the pattern of around 10 to 11% capital growth over the long term.
If your property grows quicker than this, it’s more likely to be for the short term only due to some major changes in the direct area such as an improvement to the local amenities or infrastructure.
You can maximise your return on your investment by structuring your finances in the best possible way and ensuring that you pay fair market value in an area within the investment property guidelines.
We find, deliver and negotiate property that will achieve good capital growth over the long term after researching the historical data of the chosen area.
Always plan to settle the property and not sell during the construction period and make sure you have the financial means to settle the property no what the case, and make sure your purchase is under $550,000 as this entry level price appeals to the entire buying market and is easy to sell.
There never seems to be enough money left over to really enjoy. It seems like wealth generally doesn’t come from blood, sweat and tears like we are all told growing up.
It seems like real wealth in generated in the background and is a bit more of a slower process. I mean, even if you are paying off your own home, the forced savings are far better than dead rent, because when you sell it you get your invested money and, in most cases way more, but when you move out of a rented property after 3 years the $75,000 has gone down the drain. Obviously investment property works even better whereby the tenant reduces the debt while the property value goes up by capital growth, it’s a win-win.
I do a lot of in home consultations and get to meet some great people, but doing this has giving me a very clear insight into how important having a clear property investment strategy or plan really is. Firstly, when customers tell me they want to buy an investment property I explain the process and steps and also let them know important points for consideration as well as the risk and reward.
Generally I explain to them they will need to be assessed by a mortgage broker to confirm a suitable purchase budget to get things underway and tell them what their most likely purchase deposit will be. Most time customers tell me they don’t have much deposit as they hadn’t really decided to buy until recently so they hadn’t really been saving for anything. If they had planned to buy they would have been focused more on saving money.
Secondly, I ask them what type of property they would like to purchase and in what area. I also ask them about their planned tax benefits and also how they intend to rent it and how much for, their desired returns and also the type of capital growth they are planning for and even ask them what type of loan they plan to get. Every time the answer is the same..’we have no idea’.
From here I generally back track and start to create a plan with the customer. This does 2 things 1; it shows them the process and educates them on what they need to do and how best to do it and 2; it gives them complete confidence that they are buying the right property for their circumstances.
I have a heap of information that we walk through step by step and the clients really enjoy learning the ‘ins and outs’ of investing in property and it also sets them on a path of financial success.
Once they understand how to buy the right investment property it is simply a matter of sitting back enjoying life and letting the property accumulate capital growth.
Don’t forget…buying an investment property should be a fun and exciting process.
There are a heap of great advantages to buying an investment property. Here are just a few of them:
You can borrow more to fund real estate purchases than any other asset because of its ‘bricks n mortar’ high security. You can actually receive returns on money that is not even yours. So in other words, you invest a deposit of $40,000 on a $400,000 property and you will receive from 5-15% annual return on the $360,000 that is not even your money (borrowed funds).
Over the long term real estate has returned around 10% per year in capital growth and rental yield before holding costs.
As long as you purchase within your means and you have a deposit so that there is equity in the property you will never go broke as there will always be demand for property (either a home or investment to rent out).
Owning real estate forces a good discipline when it comes to saving money. People paying off a mortgage are less likely to waste money on things they do not need as they have a financial commitment each month that is accumulating wealth, not wasting savings.
Forced savings also turns into compounding profits so that as the property increases in value, your money is turning into more money that is why the earlier you start investing in real estate the better.
Property allows you to add value at any point but adding new features, upgrading or just repairing parts of the property that will dramatically increase the value of the property. Sometimes it’s just new paint, tidying the gardening or even new carpet that can dramatically increase the value of the property.
Some owners of property have had agents calling them asking if they are interested in selling their property as they have a buyer ready to make an offer, well over the normal asking price. This is the result of being in ‘the game’, no one has ever knocked on a door offering anyone double what’s in their bank account.
As an owner of a property many opportunities to use the property to buy more property, or sell the property for big profits, will arise, if you don’t buy property none of these opportunities will ever come your way