While bonds, shares and equities can be highly volatile, property generally appreciates steadily in value over time. Buying distressed properties and below market value properties will give you a head start, placing you five to seven years ahead of a traditional property purchase.
The secret of success is to do your homework – research the market and educate yourself – so you understand how to build a property investment portfolio. Know where to invest. Make the right decisions upfront. Don’t be put off by the market conditions, but be informed and understand the cycle it’s currently in.
Those who abide by the principles of how to build a property investment portfolio will see good returns. Investors who make smart choices will undoubtedly see their investment grow in the long term, through recessionary as well as boom times.
The big bonus of property investments is that property can be financed and used as leverage, so you can buy it with “other people’s money”. Banks are more likely to lend with property, an appreciating asset, as collateral. The asset can always be sold if the bond holder defaults.
Also, the property market is easier to predict as it goes through cycles with indicators to help you more accurately predict your return on investment, as opposed to needing to sell shares at exactly the right time to make a profit.
When assessing how to buy investment property, investors should start by understanding these essential factors:
- Property type
- What cycle the market is in
- Long-term appreciation potential
Remember your investment should match inflation or beat it.
IGrow provides members with access to already vetted lists of distressed properties and assists investors in acquiring and managing top performing properties that provide above-average rental income and capital growth yields.
Rather than make a gigantic mistake and risk losing money, be sure that you are buying below market value properties that will see you building significant wealth in the future.
As the property value goes up over the long term, the amount owed on the bond goes down – and if the property is generating rental income it will likely cover the bond payments within a few years of buying.
Rental income incurs the usual tax but investors can deduct the interest portion on the bond and costs associated with maintaining the property. Capital Gains Tax will only be a consideration should you sell the property and is dependent on what you get for it.
It’s exciting to find a property you’ve decided to invest in, but always calculate costs of ownership – and factor in regular maintenance to avoid costly and unexpected repairs. A well looked after property in the right location will continue to yield good returns and form a valuable asset in growing your wealth portfolio.