Why Real Estate still tops the list for Investors
With fear of property price fluctuations, economy shifts and the government’s budget right around the corner, it is high time I did a blog on debunking some of the conventional myths about property investing in the current market.
There are a number of reasons why real estate investing remains the most popular investment pick in the country.
1. There’s always more than one way to invest in real estate
And it’s more than just the capital gains perspective. A primary strategy can also be for cash flow. Property offers many different strategy and outcome options based on short and long term, high and low yield. Take the NRAS (national rental affordability scheme) for example which is a partnership between the Australian Government and the States and Territories to invest in affordable rental housing which can lead to a positive cash flow investment.
A rising trend in investing is through Real estate investment groups which is like a small mutual fund for rental properties. If you want to own a rental property, but don’t want the hassle of being a landlord, a real estate investment group may be the solution for you.
2. Leverage the banks money
When comparing investment classes and talking cash down VS percentage of return value, real estate generally comes out on top.
On a typical real estate investment, you usually require a deposit of 5-10% of the value of the investment while the bank puts in around 90% of the value.
And if you’re really savvy, you can find investors to cover some of the deposit, limiting your cash outlay.
This allows you to have the potential for a much greater return on investment (ROI) and leverage up to 90% of your assets performance on someone else’s money.
3. Invest Countercyclical
Read about the world’s leading investors both past and current and one commonality can be formed from their varying strategies. You buy when things are down and sell when things are up. Simple strategy yes? But not as easy to execute. These investors have the insight, liquidity and guts to invest during times of market turmoil when fear and uncertainty are at their highest and most investors and buyers are running for the hills or sitting on their hands. The best deals are made in times like these.
We have done many property clock blogs in the past talking about market cycles which you can find here
4. Your tenants pay
With property investment, the value comes from the rent your tenants pay (this is your gross income). Just like a business, you calculate your gross expenses and subtract them from your gross income to determine if the resulting net income is worth the investment.
Investment properties such as positively geared and positive cash flow investments also make it possible to hold an investment property that will cover your operating costs, like repairs and maintenance as well as your loan expenses.
The NRAS (national rental affordability scheme) can also assist with this strategy that lets the rent pay off your mortgage and allows eligible individuals and families are able to rent NRAS dwellings at a rate that is at least 20 per cent below market value rent.
5. Hidden profit
There is some hidden profit opportunities that real estate provides and that’s getting smart and knowing your possible tax benefits.
Most of us know about negative gearing reducing your overall taxable income by allowing you to claim the difference between income and costs as a deduction. Make sure you are aware of any costs associated with your property investment can also reduce your income as there are a wide range available to claim.
Depreciation is another tax benefit that property investors can claim. You can depreciate a percentage of your property each year as a loss, lowering your taxable income.
Some investment properties also qualify for ‘capital allowance’ or ‘building allowance’ depreciation. In this case, depreciation is related to the building itself.
Additionally, there are many other benefits you can discuss with your accountant or financial planner.
No matter what the market, these benefits add up to why you should consider investing in real estate.
Protect your house from theft
A break in can have effects much more than just your property – unsettling your peace and the feeling of security in your home. There are simple and effective steps you can take to reduce your home’s risk of invasion, whether you’re away on holidays or staying at home.
Here are 6 ways to prevent theft and make your house unappealing to burglars:
1. Windows & Doors
Burglars will get into your home via doors and windows, so ensure they are fitted with visible (and sturdy) locks. If looking to renovate or building, ensure you have thick, solid doors that will be hard to kick in. If your doors have a window, install a secondary floor lock for extra security.
2. Lock Your Doors
It’s amazing how many people fail to lock their doors. Its common sense but lock up every time you go out, but also keep the doors locked when you’re home especially at night. If you leave screened doors and windows open ensure you have good locks and use sturdy screens.
3. Alarm/security System
A home alarm system is one of the top ways to deter burglars from targeting your home. If you do have a home alarm system make sure it is visible and your alarm company has a fast response time. You may also wish to consider whether you want the police automatically notified of an alarm event.
If you have a hidden front entrance or side access to your home these can attract burglars as it provides privacy when they are trying to break in unobserved. Easy ways to deter them are to have motion activated lights or sensor security lights for visibility at night. You can also trim trees and hedges to create visibility from the street or install lights on a timer at the front of your house (such as walkway or front porch lights) to create the illusion of being home.
5. Garbage and mail
Rubbish that shows recent large purchases such as new television screen boxes and lots of mail signifying you’re away on holidays are easy identifiers for burglars. Hide your bins away from the street front when it’s not collection day and consider mail redirection or a friend collecting your mail when away.
6. Safe & Secure
Protect your valuables just in case theft does happen. Have precious valuables safely secured in a safe. Mark all your valuables with engraved identification and photograph valuables to ensure you keep your contents insurance up to date.
In general, following these tips and daily habits such as keeping curtains and blinds closed on the ground floor helps to deter burglars as they can’t assess your property’s value or determine whether you are home. By taking a few key precautions you can keep your home safe and secure.