What makes property investment so popular in Australia? Property investment can provide a healthy nest egg which removes the need to become solely reliant on your super or pension to get you through retirement. Australian property is a low risk, high return investment. Property prices have nearly doubled every ten years (ABS) and have grown consistently over the past 50 years (UNSW).
Why does property consistently deliver a better and more secure return than other investments? It’s all about leverage and before tax dollars.
A $50,000 deposit is often enough to buy a $500,000 property which can return $40,000 p.a. at 8%. Shares on the other hand will return at a higher average rate of 12%, but the absence of leverage means you will only see a $6,000 return on investment each year on a $50,000 investment.
A typical mortgage where the owner lives in the home and the mortgage is paid over a 30 year term, will often result in repaying significantly more than what you borrowed in interest. That’s why we recommend buying property as an investment rather than as a personal debt. Investment debt is paid with before tax dollars, which means you can borrow more and enjoy deductions, paying less each month compared to repayments on a personal debt.
Here are our top 5 tips for investing in property:

  1. Get a team
    You need a team of experts to work with you to achieve the best results. This might include an accountant, real estate agent, finance broker, financial planner, research specialist, property manager, and potentially a builder.
  2. Review your options
    Find out how much you can invest, and work out how much you can save each month. Your broker can assist you with this.
  3. Create a plan
    Identify where you are and what your goals are for wealth creation and retirement. Include the uncertainties of life, such as job loss, additions to the family, sickness, etc. Review the best structures for tax and finance. Plan for market changes including rental market factors and changes to rates.
  4. Do the research
    Investigate the investment area and the different property investment strategies that are available to you.
  5. Take action
    One of the biggest factors is timing in the market. While you are researching your options, you should also factor in the opportunity cost.

Find out more by registering for one of our seminars.