• Strong historical performance: Residential property has outperformed other investment types, including shares, over the past 20 years.
• Control: Property is a great investment because you have direct control over the returns from it. One of the major benefits is that you can manage your assets rather than leaving the decisions to a large corporation or fund manager.
If your property is not producing good returns, you can add value through renovations or adding furniture to make it more desirable to tenants. In other words, you can directly influence your return by taking an interest in your property, understanding and meeting the needs of your prospective tenants.
• Leverage: One of the special things about property is that banks will lend you up to 80% of the value of the property, enabling you to use other people’s money to purchase your investment.
• Tax advantages: Investment properties offer large tax advantages including depreciation and the possibility of negative gearing if it is appropriate for you.
• Security: It is often said that residential real estate offers the security of bricks and mortar. What this means is that houses don’t “go broke” like companies or shares do.This is partly due to the size of the
residential market and also the fact that just under 70% of the people that own properties are not investors, but are owner occupiers. The residential market is the only investment market that is not dominated by investors and this provides a built in safety net.
• Income: The rental income you receive from your property allows you to borrow and get the benefits of leverage by helping pay the interest on your mortgage.
• Property is forgiving: Even if you bought the worst property at the worst possible time, chances are it will still go up in value over the next years. History has proved that real estate is possibly the most forgiving asset over time. If you are prepared to hold an investment property over a number of years it is bound to rise in value.
• You can insure for many of the risks: Not just building insurance, but many investors take out landlords insurance to protect their interests.