There are all sorts of investments available at any stage for anyone who wants to get started in making their money work for them or are looking for future financial security. With all the options out there, property investment is still a leading choice. In this article, we’ll tell you 10 reasons why investing in property and buying house and land is a good idea.
1. It’s as safe as houses
Based on the research of AMP, Australian property has increased the property rate comparable to that of the share market since 1926, averaging 11.4% per annum – and this is despite the wars, disasters, recessions and crises in the property market or otherwise. This makes property investment the safer investment.
Factoring the return and risk associated in property purchase plus shares, property easily wins. Shares have more capital growth potential, but the risk is huge. The risk is assessed in returns and capital growth/lost and shares can range from +40% annually to -40% in a week! This isn’t the case in property, which makes it a safer investment consideration.
2. An investment for every budget
The too-often-made claim that Australian property is unaffordable is untrue. If you’re looking for an investment in prime suburbs of Melbourne or Sydney, it’ll be hard to find great properties from half a million. However, middle-ring suburbs, regional towns and cities, or cheaper capitals like Hobart and Adelaide all offer affordable entry points
3. Price is flexible
In the property market, buying and selling are all about negotiation. You can talk down a vendor; equally, a motivated buyer can pay over the odds for a property. There’s also huge opportunity to acquire undervalued properties, particularly mortgagee sales or deceased estate as well as sales due to divorce.
4. Starting is easy
You don’t need to be an expert to start investing in property. Many Australian property investors didn’t start off with the dream to make it big through property. Instead, they simply bought a house to live in. It’s only after the value of their home increases and seeing how much wealth they can generate – that they become investors who proactively invest.
5. It’s easier than stocks and shares
The stock market requires a lot of education. You must truly understand how the system works, understand the complex world of trading and research brokers and fund managers. You then need grips with the companies on the market aside from trawling the financial press, checking annual reports, etc.
Investing in property is easier and at its most basic, you can simply jump online and start looking at properties. A significant amount of research can be done online or by visiting suburbs, open houses and auctions – without the need for reams of specialist knowledge beforehand.
6. It’s easy to get financed
You may not feel this while still applying for mortgage, but lenders do like property loans. Home loans are a huge part of any bank’s business model, and lenders look to lend residential property investors than any other asset class since they typically lend a higher proportion of the value than any other asset class – including commercial property. It’s easier to borrow to invest in property than in any other asset class.
7. Leverage can be used
Lenders can lend up to 95% of the value of the property while they may only lend up to 50 or 60% of the value for shared portfolio. This borrowing power lets you benefit from the capital growth of a bigger asset. The greater leverage you can access, the better – and this is probably the best thing in regard to property.
8. You have utter control
When buying a home, a broker is a good partner to have, but it’s not a necessity. After you settled, you directly own the asset and you have utter control over it. You just need to keep up the mortgage repayments. This is a powerful thing since you can influence both asset worth and cash flow directly.
9. You can renovate and profit more
Renovating cosmetically is a tried and true method of growing the value of a property – even spending a few thousand dollars can add twice as much to the right property. Structural renovation, which includes adding bedrooms, bathrooms and so on also boosts property value.
10. Personal home loans are better these days
Finally, investors and first-time homeowners today benefit extensively from top lenders such as Newcastle Permanent Building Society that offer a plethora of services so whether you want a variable or fixed rate home loan, a credit facility or the freedom to split your loan, they offer a home loan that suits your needs. Check them out!
Indeed, real estate can be a great investment, but choosing the wrong property is disastrous. You need to research your chosen property and its location first before diving into it. The good news is that with a little time and effort, you can start investing in a property with goals of either purchasing for your own property or for profit. Best of luck!