Real Estate – Long Term
Real estate is a long term investment that requires discipline, patience and a solid strategy. History shows on average property prices double in value every 7-10 years, however if you choose the right property you can easily achieve much higher growth rates.
We know this statement sounds unbelievable, and at first it is difficult to get your head around that a property you buy today for $400,000 will be worth $800,000 in 10 years. We will look at the hard data to back up this claim later this lesson.
Experienced property investors hold real estate for a minimum of 10 years, or never sell at all. Unlike shares or other investment types it is best to acquire property and keep growing your property portfolio then to sell and make quick profits.
Because property is a long term investment, time in the market is more important than timing the market. Over a 10 year period or more, your property value will probably ride out some bumps over the economic cycle and experience solid growth.
You only need to look at a graph of median house price growth over the long term to see that property values move up and down, all the while trending upwards. This is why when you ask many property investors, ‘when is the best time to buy?’ they’ll answer 20 years ago.
Why Buy Real Estate?
Property has long been a favoured way of Australians to invest because it is one of the simplest investment types to understand and if done right has very low risk.
People will always need a place to live, it is one of our most primal instincts. There will always be a demand for property and rental housing because not everyone can afford to, wants to, or is brave enough to buy a home.
Owning your own property allows you to renovate rooms or extend your home to your tastes and provides a sense of security. Your first home is also the cornerstone of any investment and is the first step to becoming a property investor.
For property investors real estate provides a regular income that will progressively grow over the years. Property also provides capital gains when your suburb or town raises in value meaning you can sell for profit or unlock equity to buy more investments.
Property Benefits
Why choose to buy property rather than other growth assets such as shares or commodities?
There are many good reasons, including:
- capital growth
- rental income
- hedge against inflation
- tax benefits
- larger borrowing capacity
- you can add value
- Financial security.
| Property Goals
Before you purchase your first home or start investing in property, you need to ask yourself: what is my goal? Do you want to:
It is important to establish what your goals are before you start because it will determine what type of property or investment suits you. Property investors who have done very well financially acquire real estate rather than buying and selling. It is a common myth you need to sell real estate to make a profit. Over time rents increase and you will find the rent more than pays for the mortgage giving you passive income. Why sell the goose who lays the golden egg? Congratulations, you have completed Lesson One: Real Estate Rewards! Please keep in mind the following points:
|
Choose Your Investment Strategy
Choosing the right property investment strategy is all about matching your goals to the right investing solution.
Some people prefer capital gains – where you use equity in your properties to buy more properties thus giving you a large portfolio. Others prefer cash flow – high rents that more then cover the holding costs of property.
(Once you have chosen your strategy to achieve the best results stick to it don’t swap and change)
AssetZ has the strategies, the research team, products and experience to point you in the right direction.
Contact AssetZ for your individual analysis at info@assetz.com.au