Useful Tips

Investing in Property

Every lender has their own terms and conditions, and this is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.

Benefits
Leverage – you use your cash to invest a percentage of the purchase price of the investment property. It’s possible to borrow 95% of the value of a property to purchase it – so together with the 5% needed for government and lender costs; you need only commit 10% of the purchase price from your own cash.

So for 10% of the value of the property, you benefit from 100% of the capital gain in the property value.
You also leverage your tenant’s income through payment of rent to you, to achieve your financial goals and to afford your borrowings.

Disadvantages
Property is a single large asset that you can’t sell quickly. If you do need to sell a property, you have to allow time to market the property and once it is sold, there is usually a 30-90 day settlement period before you get access to your cash.

Things to consider
Property is a long term investment. History tells us if you hold practically any property long enough, you will achieve price growth. But like most investment markets, growth is cyclical. If you want to experience a full cycle and maximise your gain, you should buy with a view to hold for at least 10 years.
Investing purely for the Negative Gearing tax break is counterproductive – unless the asset you’ve purchased is of a good quality and likely to generate a decent capital return in time.

Other EQUITYVISION Tips for more information on Investing in Property:

How to use Equity to Invest
Loan Structuring for Investing
Negative Gearing
Investment Property Mistakes