Why is property seen as one of the most effective means of generating wealth?
Residential real estate has long been a popular investment choice because it offers both stability and high profits. According to the Australian Taxation Office, there are more than 2.2 million property investors in Australia, which suggests that almost 20% of families own at least one investment property.
Investment properties offer a diverse range of advantages that can be used to achieve a variety of objectives. In today’s blog, we’ll go through some compelling reasons why property is the most popular investment option for most Australians.
It’s risk-free.
Real estate is a real asset that has historically been less volatile than other investments like stocks and cryptocurrency. Large financial organizations, such as banks, see real estate as a safe asset class and are willing to lend money to anyone who wants to invest in it.
Property value increase.
The real estate market goes through cycles and has its ups and downs, but property values normally rise over time. Historical evidence reveals that as time passes, real estate grows increasingly expensive. In Australia, the housing market has changed dramatically over the previous 25 years, with median house values increasing by more than 400%.
One of the most practical investment is real-estate.
Even homes that aren’t well-chosen tend to appreciate in value over time as demand and population increase. It is rare to find a cheaper property today than it was 20 years ago, regardless of location.
Tax benefits are available for investment properties.
The Australian government offers a variety of tax advantages to stimulate property investment. Interest on loans, depreciation, and other property-related charges can all be claimed to lower your tax bill and increase your return.
Applying the strength of leverage
Property only requires a small initial investment (typically 10-20% of the buying price), with the balance being leveraged with bank funds (mortgage). The benefit of leveraging your money is that your earnings are computed based on the whole amount rather than your invested capital when the property appreciates in value.
It’s a passive income.
Properties can become a solid source of revenue once they are rented. If you’re a landlord, your rental property is open 24 hours a day, seven days a week. You can use passive income to cover all or part of your ownership costs and mortgage payments.
It protects your income from inflation.
Money in a savings account loses value when interest rates are low and inflation is high. Lower rates, on the other hand, boost house buyer and investor activity, which raises property demand and, as a result, raises property values. Money saved tends to degrade, whereas money invested in real estate tends to expand.
An exclusive way to apply the profits.
Property is exceptional in that you can take advantage of financial gains without having to sell it. The fact that banks allow property owners to refinance their mortgage and utilize the equity (the gap between the existing mortgage on a property and the current market price) for other investments makes this viable.
Anyone can do it.
You do not need to be wealthy or have a large sum of money to invest in real estate. The average Australian is the largest group of people that invest in real estate. According to ATO data, around Property investors have a yearly taxable income of less than $80,000 in 64% of cases.
Talk to us so we can discuss your options. Call us at 0426667696 or send us an email at contact@ozbroker.com.au