There’s many ways to invest your money to build your wealth, such as shares and savings. However property investing has proven to be a STAR PERFORMER in helping Australians achieve their financial goals.
In this post, I’m going to share the top 3 reasons why real estate is such a popular choice for investors.
1. Outstanding capital growth
Capital growth refers to when the market value of a house increases to a level that is more than what you originally paid for the property.
It’s no news to anyone that house prices have seen remarkable growth around Australian capital cities especially in the last five years.
However house prices aren’t only dependent on the market – what’s great about property is that you can create your own capital growth through renovating wisely.
This is what sets property apart from other investments – it’s tangible ‘bricks and mortar’ and you are in the driver’s seat to make the decisions to improve its value and to achieve amazing capital growth.
2. Steady yield
Yield is a measure of the income that is received on an investment. Income can include rent, interest and dividends. The yield percentage is calculated as income earned compared to the cost of the investment.
For example, if you bought a house for $400,000 and it earns rental income of $400 per week, this means the annual rental yield is about 5%.
Rental properties can have fantastic yield especially if you know where to look. On realestate.com.au, 3 of the 5 highest performing rental yield suburbs are currently in Victoria:
- 1 bedroom units in Bentleigh have an average yield of 6%
- 1 bedroom units in Burwood have an average yield of 2%
- 1 bedroom units in Notting Hill have an average yield of 8%
Meanwhile interest earned on savings accounts is at an all-time low, with the Reserve Bank cutting the cash rate to a meagre 1.75%. Dividends on shares are also unpredictable as companies cut back when profits are down – recent examples include blue chips such as BHP and Rio Tinto.
Of course rental properties also come with their costs but low interest rates combined with tax benefits means many property investors still come out ahead.
3. Paying down bad debt cheaply
In my last post 5 Simple Ways to Supercharge Your Property Depreciation Deductions, I discussed the difference between ‘good debt’ and ‘bad debt’.
Good debt includes investment property loans as the interest paid on those loans is deductible for tax. Bad debt includes your credit card debt and personal loans which are not tax deductible.
Mortgages often offer lower interest rates than other loans because they are ‘secured’ by a property. Therefore by purchasing property, investors can use this opportunity to restructure their loans to ensure bad debt is paid off and reduce their overall costs.
About Mortgage Corp
Mortgage Corp loan specialist can help you assess your current financial position and come up with a loan strategy for long term investment success.
Mortgage Corp, Melbourne top mortgage brokers for current and future property investors, specialises in helping successful professionals and property investors maximise their long term investment return with our strategic approach to loan serviceability, tax savings and wealth creation.
While most banks and brokers focus on merely getting you a loan, Mortgage Corp is committed to getting you a comprehensive investment result. Request a Free Loan Strategy Session with our 5 Star Lending Specialist Neil Carstairs today!
About Neil Carstairs
Neil is the founder of Mortgage Corp, an active property investor and awarding winning MFAA accredited finance broker with more than 10 years’ mortgage broking experience. Currently, Neil is one of only 19 MFAA Certified Mentors in VIC/TAS region.
He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not. Connect with Neil on LinkedIn.