Tools & Advice   Buyer's Guide   3 Reasons to Invest in Property

3 Reasons to Invest in Property

Published on 01 Feb 2017 by Emily Long

3 Reasons to Invest in Property


First thing to understand is WHY INVEST? There is no way you can save enough money to retire on, for a passive income of $50,000 today you need about $1m in cash at the bank, super or income producing assets such as Property.

3 Reasons to Invest in Property

1. Leverage
If I have a $40,000 cash deposit it can only grow by its “asset value” times by the “rate of return” i.e. $40,000 x 5% interest rate = $2,000

I can use that same $40,000 to acquire a property valued at $400,000 the new asset value is $400,000 times by “rate of return” i.e. $400,000 x 5% = $20,000

THAT MEANS YOU ARE 900% BETTER OFF BY BUYING AN INVESTMENT PROPERTY THAN SAVING YOUR MONEY IN THE BANK

Given you probably want to retire with more than $50,000 income per year in retirement you should consider Leveraging to hold a higher value of assets.

Which asset will the banks lend you the most money on? You guessed it… Property!

2. Tax
Another significant benefit of investing in Property is managing your Tax affairs better, over the past few years the emphasis has shifted from Negative Gearing to SMSF & Property.

Additional money that you put into Superannuation (Salary Sacrifice) is a deduction that you can claim against your Income Tax.

An average Australian earning $75,000pa could Salary Sacrifice $10,000 into their Superannuation Fund and the actual out of pocket would be as little as $62.50p/w

Superannuation is essentially a Savings account that you cannot access until you retire, in this scenario you are able to save $192p/w and it only costs you $62.50p/w the rest is made up of your Tax-refund!

You can today setup a Self Managed Superannuation Fund (SMSF) relatively cheaply, if you were to buy Property with this structure you could essentially reduce Capital Gains Tax to $0 and reduce Income Tax on rental to $0 in Retirement – Another Tax saving!

3. Legacy
Historically Property has been one of the strongest assets in the world and is the main reason that ‘ultra-high net worth’ individuals hold one-fifth of their wealth in Property (source: CBA)

Property is one of the best assets you can leave to your family, rather than leaving cash to your children -  Property increases in value and Cash decreases in value over time

“My parents bought their first house in Australia for $23,000.. fast forward to today and that same property is worth approximately $650,000! “

Emily Long

Emily is one of our friendly agents who can assist you with your all important off the plan property purchase in Melbourne, Sydney and Brisbane.

Did you like this article?

Sign up to the iBuyNew newsletter to receive more articles and property news straight to your inbox.

Related Articles

  • Emily Long

    Why Do I Need Landlord’s Insurance?

    21 May 2013 - You take out insurance for your car, health and home. So why not on your investment property?

  • Emily Long

    Comparing Apples with Apples

    22 May 2013 - Property prices are some of the most difficult numbers to pin down when comparing between two different properties as both are entirely unique. Try iBuyNew’s comparison checklist here for a comprehensive list of factors that should help you compare properties for yourself.

  • Emily Long

    What Are Sunset Dates?

    18 April 2013 - When purchasing any property off plan, be it apartments or a house and land package, the contract will have what is called a Sunset Date. The Sunset Date is the day by which the developer is able to fulfil their obligations as stipulated in the contract.

As featured in: