There are many benefits of investing in residential property, the top 5 being:
1. Regular rental income
Unlike other investments like a term deposit or shares, property has the potential to deliver a return from day one.
2. Scarcity plus ongoing demand
By its nature, land is in limited supply and this helps to underpin long-term growth in the value of residential real estate.
3. Tax Benefits
You are able to claim a tax deduction for the expenses associated with owning a rental property.
4. The only asset class not dominated by investors
Unlike anything else that you could use as an investment vehicle, residential property has the safety feature of being the only asset class that is not dominated by investors. That is, everybody needs a roof over their head, in good economic times and bad. The residential property market is heavily dominated by homeowners.
5. Property never goes back to zero
On September 24th 2014 the ABC reported that nearly a third of ASX-listed companies are fragile, at risk of financial catastrophe. Here are just a small sample of high profile, once successful, listed companies that went broke in recent years, costing investors dearly:
- The Pyramid Building Society
- The State Bank of Victoria
- Storm Financial
- Rodney Adler’s FAI Insurance company
- Great Southern
Residential property will have periods of no growth and even times of negative growth, but for those who treat it as a longer term investment and hold onto it there will always be gains.
Nobody who still owns a residential property that they purchased in the 1960’s has failed to make great capital gains. The same can be said for those who bought in the 1970’s, 1980’s, 1990’s and even the early part of the 2000’s. Sure, the GFC has seen property values in parts of Australia stall in more recent years, but those who still own their property - purchased in 2009 - 20 years from now will be ‘laughing all the way to the bank’.
Sooner or later, all residential property doubles in value. The key is to understand you are in business and make sensible decisions from the outset when you first decide to invest in property and continue to make sound business-like decisions while you grow your residential property business.
Our role at MRD is to partner with you on your wealth building journey and assist you to stay on track and not allow temporary circumstances and media hype derail your efforts to become financially independent through property.
peak to a property specialist today on: 1300 883 854 or contact us