16 Sep 2016
Why would you believe a property investment company to give unbiased advice on whether property investment is right for you?
If this is the only research you do, then you shouldn't. What we want to do is put forward the case for investing in property, based on a mix of facts and figures as well as our personal experience. You can then at least have one side of the argument and then researching other opportunities.
We will present x points which, in our experience, strongly support the case for property investment:
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Stability
The following graph best shows the stable performance of property versus the share market. Property doesn't always go up in value, but the drops are relatively small:
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Leverage
The banks love to lend money to people to buy property, as they consider it relatively safe with consistent returns. This means that if they are happy to lend to you, you secure an asset worth much more than the cash you have which should then double, triple in value over time. As little as $20,000 can secure you an asset worth $500,000. Which would you rather have double in value, $20,000 or $500,000? -
Control
What happens if you buy BHP shares and you tell them you don't like the decisions they are making? You control your property - sell, rent, renovate, extend, refinance etc. You control where you buy or build, what you buy or build and what you do with it while you own it. -
You're providing a necessary service
You have gone to the trouble of buying or building a house that then provides shelter and a home for someone else. They may not be fortunate enough to be able to buy one for themselves, so there options are more limited. When you find good tenants, be nice to them! -
Tax
Years ago the government realised that private landlords were the most efficient and cost effective way to provide the ever growing need for rental properties. Consequently they encouraged investing in rental property with a range of tax incentives, which basically means that if the income on your property does not cover all of its costs, you can offset the difference against your income tax. We like to think of it as being able to swap your tax for an investment property! -
Buy below market and sell above
If you could buy gold at $1,000 an ounce and you knew it was worth $1,150 an ounce, you'd probably buy as much as you could. What if you could build a house on land for $500,000 and it would be worth $575,000 when finished? Then when you come to sell, you are able to really make the house 'shine' and someone is happy to pay you a little more than it might be worth because it's exactly what they want. You can't do either with shares. -
Add value
Those BHP shares again. You decide you want to try and add some more value to the company, what can you do? But with your property, you can renovate, extend, go up, go down, put in beautiful wooden floors and so on. The only thing you can't do is relocate it, so make sure you get the location right!
The founders of Sprout have found property investment to be the single most significant contributor to their financial success, providing both positive cash flow as well as significant capital growth. They want to help you to do similar.
As an example of its potential power to change your life, and as a bit of fun, try the 5 minute exercise below:
Scroll sideways to view table.
Question | Your answer |
---|---|
How many properties would you feel comfortable owning (apart from your house, including any current investment properties)? | (Fig A.) |
Multiply that figure by $500,000 |
Fig A x $500,000 = $
(Fig. B)
|
How long for you until retirement or financial freedom (to the nearest 10 years) | Years (10, 20, 30, 40) |
Start with Fig B and double the figure once for every 10 years you have to retirement/freedom |
=$
(Fig. C)
|
Deduct the original value of your properties |
Fig C - Fig B = $
(equity gain)
|
Write a few things you would want to do with that money? |
1. 2. 3. 4. 5. |