It’s All About the Numbers
“Ninety percent of all millionaires become so through owning real estate.”
Andrew Carnegie
Why invest?
Because money makes money.
The purpose of investing some of your hard earned cash is to eventually replace some or all your working income with passive income so that you can enjoy your later years in a comfortable lifestyle.
Of course, never put ‘all your eggs in one basket’, so spread your money over a few different asset classes, like super, cash in the bank, share market, property, commodities etc.
You must figure out what might work for you and for nudging out an appropriate strategy you are best advised to talk to your accountant and/ or financial planner.
There is one basic rule when it comes to investing:
High return equals high risk and low return equals low risk.
There are many ways you can make money with property but let’s focus on residential property investment and why it is a rather safe wealth creation instrument:
1. There are two major human needs for survival: food and shelter. Property means shelter; so there will always be demand for it that often outstrips supply.
2. Banks trust in property as security and usually provide funding for the best part of the purchase price, especially for residential property (investment).
3. Property is a tangible asset and therefore can be insured.
4. The Australian government provides property investors with certain tax incentives that help cover the holding costs, commonly known as Negative Gearing.
However, buying an investment property differs vastly from buying a home to live in.
The latter is all about your personal needs, the What and Where you purchase and how much financial burden you are prepared to wear.
It’s All About the Numbers
“Ninety percent of all millionaires become so through owning real estate.”
Andrew Carnegie
Why invest?
Because money makes money.
The purpose of investing some of your hard earned cash is to eventually replace some or all your working income with passive income so that you can enjoy your later years in a comfortable lifestyle.
Of course, never put ‘all your eggs in one basket’, so spread your money over a few different asset classes, like super, cash in the bank, share market, property, commodities etc.
You must figure out what might work for you and for nudging out an appropriate strategy you are best advised to talk to your accountant and/ or financial planner.
There is one basic rule when it comes to investing:
High return equals high risk and low return equals low risk.
There are many ways you can make money with property but let’s focus on residential property investment and why it is a rather safe wealth creation instrument:
1. There are two major human needs for survival: food and shelter. Property means shelter; so there will always be demand for it that often outstrips supply.
2. Banks trust in property as security and usually provide funding for the best part of the purchase price, especially for residential property (investment).
3. Property is a tangible asset and therefore can be insured.
4. The Australian government provides property investors with certain tax incentives that help cover the holding costs, commonly known as Negative Gearing.
However, buying an investment property differs vastly from buying a home to live in.
The latter is all about your personal needs, the What and Where you purchase and how much financial burden you are prepared to wear.
Property investment in contrary is a business decision and the What and Where depend on several factors:
1. Your future financial needs and investment goals
2. Your risk tolerance
3. Your employment and job security or stability of your business
4. Your age and hence your investment time frame
5. Your financial capacity and available surplus cash flow
6. Your income(s), expenditures, current debts and tax liabilities
7. The purchase price, age, rental return and outgoing costs of a property under consideration
8. The size of borrowings (if any) and interest rates
9. Negative Gearing, Positive and Negative Cash Flow and Capital Gains Tax exposure
10. The legal structure you want to place your investment in (i.e. SMSF, property or family trust, company or private ownership etc)
11. The capital growth potential of an area under consideration
12. The current economic climate
Property investment in contrary is a business decision and the What and Where depend on several factors:
1. Your future financial needs and investment goals
2. Your risk tolerance
3. Your employment and job security or stability of your business
4. Your age and hence your investment time frame
5. Your financial capacity and available surplus cash flow
6. Your income(s), expenditures, current debts and tax liabilities
7. The purchase price, age, rental return and outgoing costs of a property under consideration
8. The size of borrowings (if any) and interest rates
9. Negative Gearing, Positive and Negative Cash Flow and Capital Gains Tax exposure
10. The legal structure you want to place your investment in (i.e. SMSF, property or family trust, company or private ownership etc)
11. The capital growth potential of an area under consideration
12. The current economic climate
In Kenny Roger’s famous song ‘The Gambler’ there is a line that sums up all of the above:
“Every hand’s a winner and every hand’s a loser”
The same property can be a winner for one investor and a loss for another.
Every potential property investment must pass through at least these 12 filters to ensure that you are spending your money on a long term winner.
At RealEstate4U we offer you a general discussion about your investment plans and ultimately provide you with a Property Investment Analysis to confirm that the numbers stack up for you.
If you can see the merit in what we do, then please click the button below to reserve your spot for a FREE 15 minute initial consultation.
I am looking forward to connecting with you.
Harold Wolf
In Kenny Roger’s famous song ‘The Gambler’ there is a line that sums up all of the above:
“Every hand’s a winner and every hand’s a loser”
The same property can be a winner for one investor and a loss for another.
Every potential property investment must pass through at least these 12 filters to ensure that you are spending your money on a long term winner.
At RealEstate4U we offer you a general discussion about your investment plans and ultimately provide you with a Property Investment Analysis to confirm that the numbers stack up for you.
If you can see the merit in what we do, then please click the button below to reserve your spot for a FREE 15 minute initial consultation.
I am looking forward to connecting with you.
Harold Wolf
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