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…with the objective of achieving financial freedom and creating wealth for generations to come. There are multiple investment vehicles however we believe that investing in Real Estate is one of the most secure pathways to creating long-term wealth.
This article is aimed for you to seize the benefits and opportunities of investing in property.
Real estate offers lower risk, steady returns and contributes to greater diversification. Comparing an investment in Real Estate to buying alternative investments such as stocks, investing in Real Estate can be a good place to begin your journey to future wealth as you can even buy your first home utilising the government grants and incentives and turn it into an investment afterwards and this could be your stepping stone for financial independence.
This allows anyone, even (you) our beginners, to start investing in Real Estate.
1. Leverage
You can leverage your money easier from the bank/lender to buy property compared to other investment vehicles such as stocks.Banks may only lend up to 65% of the value of investment shares, and typically only lend up to 70% for the value of Commercial Properties. This makes the purchasing residential property an appealing vehicle for building wealth and with the leverage from your bank or lender, the dream of investing in Real Estate is achievable with many purchasers often putting down 12%-20% deposit and borrowing the rest.
2. Real Estate is a Tangible Asset
When you invest in Real Estate you own a tangible asset. This means you can physically touch and see this property. Unlike shares or companies, having a tangible asset provides that sense of security and assurance to have a roof over your head.
3. Easiest & Safest investment
Investing in real estate can be done by anyone with the right research,access and assistance where you can enjoy the benefits that investing in Real Estate offers. Choosing the right property allows you to take advantage of this investment vehicle with lower risk but higher gains when investing in the right area. With the right investment choice, you can even enjoy weekly passive income without too much involvement.
4. Tax deductions
Investing in real estate also grants you several tax benefits, including:
Depreciation
The reason depreciation is such a good tax advantage is that as the property ages, the structure of the property is subject to wear and tear over time and you as the investor are able to claim the depreciation from this. Because of this reason, many wealth creators choose investing in real estate primarily because they can instantly claim thousands of dollars every financial year.
Negative Gearing
When your rental income does not cover all your expenses, this means that your property is negatively geared. With any money that you lose in your investment property, you may be able to claim back against the tax you pay. This is important to work with your accountant to ensure you can claim back all the losses legitimately.
Capital Gains Tax
When the time comes to sell your property, the money you have gained from the growth value of the property you would generally need to pay Capital Gains Tax on, however you can get exemptions from capital gains tax to your principal place of residence. This is where you should leverage the of your accountant as between different States apply different exemptions.
Claiming Interest on Your Mortgage
Being able to claim the interest that you pay on your mortgage. The mortgage interest deduction allows you to reduce your taxable income by the amount of money you’ve paid in mortgage interest during the year.
No Tax Paid on Withdrawals from Equity Loan
If your property goes up in value and you don’t want to sell your property, you can actually access a portion of that money by getting a loan from the bank. This is refinancing your mortgage, see below equity growth section.
5. Equity Growth
When investing in a high growth region, your property will increase in value over time and will create a growth gap between your property value and loan amount owe. This growth value is called Equity. The lender will allow you to access this equity and cash out (80% of Property Value – loan amount owed) from your bank/lender and use this to buy your next investment property. This is how many investors go from owning just one property, to exponentially expanding their portfolio.
6. Brings in cash flow
Another benefit of investing in Real Estate is that you have another source of income without actually exerting more effort. There would be a weekly income flow which can be use to cover part or all of your expenses and in most cases, provide you with passive income. Many successful investors only spend their passive income on luxury items as this means that their investment vehicles are providing them with this added wealth.
7. The security of always having a roof over your head
When you own properties, you will have the confidence and security of having a roof over your head. If life circumstances change and for example you have invested in different States throughout Australia, you will always have the opportunity of a home in that area you’ve invested.
8. Portfolio diversification
Diversifying your portfolio allows you to minimize your overall risk. Investing in apartments and house and land are two different real estate structures as well as diversifying to different States where growth is greater including NSW, VIC, QLD and ACT.
As you have read today investing in Real Estate provides a great pathway to building your wealth and financial freedom for the future. Utilising the benefits of real estate through portfolio diversification, cash flow, tax benefits, equity growth and with the added security of always having a roof over your head, this is an investment vehicle that you need to get behind, so you can enjoy that comfortable lifestyle.
So, if you have savings to invest and are ready to purchase an investment property that generates you weekly cash-flow without exerting much effort and you are interested in learning more and would like to speak with an experienced property consultant, reach out to us today and see how we can get you started on this journey.
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