Property investment is a big commitment, and to ensure you’re making the right decision it’s important to understand your motivation for investing. Everyone has a different WHY. So, what’s your WHY?
Prospa Property Advisory’s Managing Director and Principal Strategist, Adam Hindmarch knew his WHY from a young age. After growing up in social housing, he realised as a teenager that he wanted to one day own his own home to provide financial security.
Around 15 years ago Adam was diagnosed with a rare (but non-aggressive) leukaemia which would involve long-term treatment and ongoing side effects from medication. A 40 – 60 hour work week became a thing of the past, so he learned how to invest in property.
Adam still relies on property investment to supplement his income and provide a comfortable lifestyle for his family. You can read more about his WHY here.
Motivations for Property Investment
There’s a myriad of reasons, both personal and practical, why people choose to invest in property. The driving factors vary for every person, but five of the most common are listed here. If any of these reasons resonate with you, we can help you create a Property Investment Plan and get you started.
Financial Independence
Property is an asset that is almost guaranteed to improve in value over time. In addition, a positively geared property can create a weekly income that supplements the regular income and allows for a little more discretionary money (or bonus savings!) throughout day-to-day life.
This allows you, the investor, to feel confident in your finances, while continuing to build wealth through capital gains into the future.
Work Less
The ability to choose when and how you will eventually work is a huge consideration for most property investors. With the potential of a passive income from rent, many property investors are able to retire early, or work part-time in the future.
Alternatively, property investment can let you take a “mini retirement” – similar to an extended holiday, but better! This lets you take an extended break from your ‘normal life’ and enjoy some time off (possibly relocating overseas, temporarily!), while you’re still young enough to enjoy it.
This can also open up the opportunity to pursue a personal passion – whether that be a small business, project or new hobby.
Set Up Your Family
Another reason many individuals invest in property is to set up their children for the future. Not only does owning property assist with financial stability, it is also a wonderful legacy to impart to your children. Plus, if at any point you have financial hardships – you can always live in your house; you can’t live in your shares!
Prepare for Retirement
The Australian Age Pension does not provide enough for a single or couple to live even a modest lifestyle. Supplementing your superannuation fund through personal investments is the best way to ensure you will be able to afford the lifestyle you desire, including sufficient healthcare, upon your retirement. And, with enough return on investment, you may not even need to access the Age Pension, removing strain on the government and taxpayers to support you.
Benefits of Property Investment
Once you understand WHY you’re investing, it’s important to also understand why you would invest in property, specifically. Some of the benefits are listed below:
Established Marketplace
Property is a tried-and-true form of investing. Property is always required as shelter for human life, and thus demand will only continue to grow as the population does. The buying and selling of properties is also well-regulated, due to it’s importance to human life.
Affordability
Though a large investment, property is actually quite affordable for most individuals with a deposit and a steady income. If you already have equity in your home, there’s a fair chance you can use equity instead of a cash deposit – meaning you may not need any up-front savings at all.
Banks also love to fund property investment, and are often willing to lend up to 90%, occasionally even 95%, of the property value if you meet their requirements. This is a reflection that banks understand and back the stability of the Australian property market.
Add to this the current record-low interest rates, and there’s never been a better time to invest.
Return on Investment
The capital growth seen on properties has been at an incline over the long term. Despite ups and downs you may see on the media, overall, property values have risen and continue to rise, meaning you are almost certain to receive a good return from investing in property. In addition, a positively geared property (a property where the property puts money back into your pocket, after expenses) will provide an additional income throughout ownership.
Tax Benefits
Due to the significant impact of the property market on the economy, the government is very willing to encourage investors by making allowances that ease the cost of owning an investment property. There are a number of expenses that are claimable on tax each year, including the depreciation of the property, interest on property investment loans, rental management fees, and maintenance and insurance costs.
If you’ve found your WHY and would like to explore your HOW, contact Prospa Property Advisory today on 1300660335 or email hello@prospaproperty.com.au.
