Monthly Archives: November 2011

The Benefits of Property Investment

Are you looking to invest in property? Due to their high demand nature, this could be an investment decision that produces great financial rewards. Beyond the monetary gain, there are also a variety of added advantages including an increase in personal wealth and your investment portfolio. How else can you benefit from investing? Read on to find out more.

Property over other investment options

Unlike other investment options, investing in property is more secure and subject to less fluctuation than investing in shares on the stock market. Shares can quickly lose value, depreciating to significantly less than the purchase price. When this happens you have effectively lost money, however those that invest in the stock market are generally aware of such a risk.

Property investments are usually of lower risk and where you buy a property in a good location, it may significantly increase in value, leading to high profits. Whilst stock may not be as expensive to buy, you can still purchase smaller properties, before using the equity in your existing properties to buy bigger and increase your wealth. As an investor, getting a loan can be easier and you may be entitled to borrow 90% to 95% LVR! This means you can continue to invest and continue to make good returns.

What should I invest in?

Whether it’s a duplex, unit or studio apartment, starting off investing in these properties types is a good start. Without taking on a large financial responsibility and burdensome mortgage, you can still receive high yields and build your investing experience before purchasing a larger property type. Once you have experience and funds, you can then move onto investing in larger homes or take on more ambitious projects such as converted hotels or display home purchases.

And it doesn’t end there! You can invest with other people by pooling your funds together, use a trust as a vehicle to purchase or enter into a property syndicate. There are opportunities to invest in residential or commercial property and the list goes on!

High returns

There is a great potential for high returns when investing in property. Where you ensure that you research the area you are buying in, plan, save and budget as well as seek advice from a financial advisor, you are likely to make a decision which will produce significant monetary benefits.

Property prices are going up, the housing market is tight and houses are selling quicker than ever. A good property in a prime location will usually increase significantly. Why leave your money in the bank account to sit there, when it can grow in an investment property? Although there are associated costs, most of these can be covered by rental income and careful financial planning.

Rental income alone is a very durable income source and can often be more than the amount that you are required to pay on your mortgage. This means that any surplus left over can be enjoyed, or go towards additional costs of property ownership.

Investors should engage in positive gearing, so that the rental income on their property covers the cost of all related expenses including mortgage repayments and other costs. Where it doesn’t, this is called negative gearing. However, any losses made on the property are tax deductible. Knowing how much you can seek to gain by investing, how can you use your investments to further invest? Read on to find out.

How can I increase my investment portfolio?

Once you buy something, whether its small or large, it will be easier for you to get finance from major banks. Unlike ordinary loans, investors can borrow 90% to 95% LVR, depending on their circumstances. Although Lenders Mortgage Insurance (LMI) applies, this can often be included in the loan amount.

Some investors can also use the equity in existing properties so that they don’t have to offer any deposit! This way you can secure more finance and go on to purchase more property. Once you have invested and made prompt mortgage repayments, banks will see that you are a low risk borrower and a more likely to lend. You can then begin increasing your investment portfolio!

Get the right advice to receive maximum benefits

Speaking to the right people can help ensure that you make an investment decision which produces the best financial results. Buying in the right area when the market is good and making sure that you have the income to cover the repayments and costs, will minimise the financial pressure involved and guarantee a better return.

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