Australian’s have a love affair with property but have you ever stopped and thought about why exactly you should invest in property?

Jerry Collova, Managing Director with PEB Group, says there are good reasons for Australians’ preference for property investment.

These are:

  1. Leverage
  2. Tax depreciation and write offs
  3. Tenants and the government help you pay off the property
  4. It’s a hard, bricks and mortar asset
  5. Earn rental income
  6. Get benefits from capital growth
  7. There is an ongoing demand for rental property
  8. Ability to add value through renovation or subdivision
  9. Ability to build long term future wealth
  10. Low Risk

While most of us get these intuitively, it means we can often take for granted just what they mean and how to use them effectively. Over the coming months we will explore each of these benefits in more depth in a series of individual blog articles, but just to give you a taste here’s what we’ll be covering;

Leverage - Use Other People’s Money

Quite simply, you put down a little of your money, as an example 20%, and borrow the remaining 80%. If you have a property worth $500,000 and the price goes up by 10%, that’s $50,000 you've made on your $100,000 deposit. That’s a return of 50% before taking out the cost of interest.

Tax Depreciation

If your property is being used to generate an investment income, then the ATO allows the property owner to claim legitimate deductions against your taxable income; and effectively reduce your tax bill.

Tenants and Govt Pay the Loan

We all understand how receiving rent assists in paying the investment loan, but do you know how to maximise both the tenant and government in helping you pay off your investment debt; whilst putting in the structures to maximise cash flow.

Hard Asset - Safe as Houses

Basically your asset isn’t going anywhere. It’s something tangible that everyone can recognise as having value.

Rental Income

Over time rents will increase while your interest costs decrease. This will give you a positive cash flow.

Capital Growth

As property values increase your equity in the property will naturally increase.

Ongoing Demand

Australia is a growing country and there is a continuing shortage of housing. This means rents will continue to grow and property prices will remain stable.

Renovation and Subdivision

For the more serious and hands-on investor, renovation and subdivision can add substantial equity to your property portfolio.

Long Term Financial Security

By buying the right property and holding on to it for the long term, you can build greater wealth and look forward to a rewarding retirement.

Safe Investing – Low Risk

As long as you buy in a safe area that’s close to cities, close to services and all amenities, property investing is very low risk.

How to Pick the Strategy that’s Best for You

Which of the above strategies and tactics you use will depend on your own circumstances and goals. A property investor on a $66,000 a year income will need a very different set of strategies than say someone on a $200,000+ income. This is where we can really help our clients by making sure they pick the right property for them and use the right tools to create the maximum amount of wealth.

For more reasons why you should be investing in property, click here or contact us for a chat.

*This article is for general information purposes only. It is not intended as financial or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser.

PEB Group is a complete property advisory service for Perth families. Offices are located in Inglewood and Willetton, Perth, Western Australia and offer service in - Financial Planning · Finance Broking · Property Management · Property Sales · Property Investment · Development

PEB Real Estate - Licensee PEB Real Estate Pty Ltd. Trading as PEB Real Estate ABN 33 604 199 617. Triennial Number RA70508

PEB Financial Planning - Howarth (WA) Pty Ltd ARN 433328 trading as PEB Financial Planning is a Corporate Authorised Representative of NEO Financial Solutions Pty Ltd. AFSL 385845 | ABN 64 141 607 098

Fungroup Enterprise Pty Ltd | ABN 50 104 943 412 | Australian Credit Licence 389510 | trading as PEB Finance | ABN 50 104 943 142 | Australian Credit Licence 389510