There is so much about investment that takes some time to learn but if you have the right capital, an investment property could be an excellent move for you. There are ways, of course, to get into the property market without the upfront investment, but you need to consider why you should invest in real estate to begin with.
Whether you want to go with luxury loft apartments and rent these out on a high rental yield, or you want to build an apartment block in a new area, there are different ways that you can invest in real estate and have an investment property that makes sense to you. So, let’s dive into the reasons why you should absolutely choose real estate as your investment opportunity.
- It’s a safe bet. Real estate is the highest performing option for long-term investment. If you don’t choose real estate, you won’t get to watch your money grow at the same rate. The average return on an investment property bought for $400k can be 8% over ten years. That’s a huge $320k return on the investment you made and it’s not something that should surprise you. Properties – particularly luxury ones – appreciate over time and they outperform shares over the long term.
- You can borrow what you need. If you have a term deposit, you can only see a return on the cash that you have up front to invest. You wouldn’t borrow money to invest in that same term deposit because the interest would be more than you’d make and that wouldn’t be worth it. Most people take a loan when they invest in real estate, ensuring that they reap returns on the bank’s money. The risk is that you could end up owing more than the property is worth, but as long as you’re meeting your repayments you’re good to go.
- It’s not a hard thing to invest in. With the right guidance, property is relatively easy to understand. Banks back property and while they have tightened up their lending criteria over the years, you don’t have to worry as long as you are earning a full time income and you have equity in your home. You can get started by purchasing a home to live in and then expanding your property portfolio as your savings grow.
- The tax benefits are worth it. Strong investment in housing is good for the country you live in due to the better housing supply, lower rents and being less dependent on the government housing initiatives. You can claim tax deductions and expenses on your property and you can benefit from other tax programs on offer.
- Housing is often subsidized. Both the government and the bank are investors in you when you buy investment property. Capital gains are chipped in by the tax government and the bank, so you get additional support when you’re an IP owner.
Get some financial advice before making any decisions so that you can make it worth your while.
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