WHAT MAKES PROPERTY A GOOD INVESTMENT?
Not sure whether property is a good investment?
Here are 8 good reasons why property makes for one of the best investments.
1) PROPERTY GENERATES CASH FLOW
Not only will your property price rise, but it will also earn money each week in the form of rent.
Depreciation and other tax deductions can also release more cash at tax time.
2) IT CAN CREATE PASSIVE INCOME
But, cash flow is one half of the story.
What’s more exciting is the potential for truly passive income.
Yup, that’s right a set and forget method for getting cash straight into your bank account each week….without lifting a finger.
3) IT’S LETS YOU USE FINANCIAL LEVERAGE
With all that cash flow, you have an easier time convincing other people (or banks) that they should lend their money to you.
Secondly, banks like to lend against hard, practical assets like property.
That’s why you can get more leverage against property, than another investment like stocks.
What this all boils down to is you can get more mileage from the savings you have.
4) PROPERTY PRICES GROW OVER TIME
If you buy property, then its price will increase over time as inflation does its thing.
The amount of gains will depend on the market and the economy at large.
This is why it is crucial to buy in the right place at the right time.
5) DEBT SHRINKS IN PROPORTION TO PRICE
When you put inflation into the equation, suddenly all that debt doesn’t seem so scary!
The thing is although your asset will get inflated in price, your debt won’t.
For example Nathan’s parents bought a home in the sixties for just $13,000. Today they could repay this loan within a few months.
Hypothetically speaking, you could never pay off a cent of principle and still end up with a loan that’s just a fraction of the new cost of your property.
6) IT IS A HARD TANGIBLE ASSET
There are few investment which are guaranteed to never go out fashion.
Housing is a basic human need. As long as there are people living in this county, they will need housing.
It’s a hard asset meaning it has the intrinsic value of bricks, mortar, land and labour built into it. What’s more, it’s pretty safe in the sense it can’t be picked up and stolen.
These qualities all contribute to the fact that property doesn’t tend to fluctuate as regularly as the stock market.
7) YOU REMAIN IN THE DRIVERS SEAT
If you buys shares in a company you really don’t have any power over how the company is managed, or makes profit.
As a property owner, you can decide whether to renovate, subdivide, increase rents etc.
You have far more control over how your asset performs.
8) IT IS FAMILIAR
Out of all the investment classes, property is the most familiar.
We all live in homes, whether rented or owned. We pick up the concept of mortgages, rents and bills early in life.
We’ve all observed the rise of property prices in our lifetimes.
For many people, property seems like a logical first step into the world of investment.
This is another reason why property will always be in demand.