Its well documented that residential property is by far the best investment even banks know this that’s why they will lend you up to 90% or more of the purchase price . If you just take a look at the data that comes from research companies in Australia like RP DATA you will see that the biggest industry is the building industry by far and with in that industry the Residential Property is by far the largest. Why is that ? Well there is a number of reasons but the biggest one is we have a population growth that is out stripping supply.
The Australian Government sees this happening so much so they have introduced a new incentive for the investor market called { NRAS for short } they want up 50,000 houses a year built through this new program. I will be writing about this in next weeks article but in short they are going to give the Investor money to create a positively geared Investment Property. You have heard the saying that the best Investment is { Brick and Mortar } well I want to add to this and tell you that land is the best investment land appreciates and building depreciates but to give you a return from that property its best to put a house on so you can collect rent and also the deprecation which comes form the tax’s you pay. When looking for an “Investment Property” make sure that in the house and land package that 30% or greater of the price is made up in the land. If you look back over history you will see that even with the dips in market cycles that property still show’s the best return. The other powerful principle at play when investing in Residential Property is leverage for example if you buy 6 homes over 10 years at 8% capital growth that will equal.
Net Assets $ 3,780,000 with a positive income from rentals of $109,200 per year. Remember the bank has lent you most of the money to buy these properties so you have also leveraged off the banks as well and the tax man has also helped you out.
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