10 Advantages Of Investing In Property (Ep69)

Property, shares, business, options, you can
even put your money in cash. There are so many different ways that you can invest your
money and so many great ways that you can invest your money and achieve financial freedom
that I wanted to talk about some of the advantages of investing in property. Property, I believe,
is a great investment vehicle, but they can all be great investment vehicles. So what
are the advantages of property over things like shares or holding in money in cash and
why should you consider investing in property. I am Ryan McClain from PositiveCashFlowAustralia.com.au
and I teach people like yourself how to find and invest in positive cash flow properties.
If you a step-by-step guide, you want me to walk you through the process of exactly how
to find positive cash flow properties, then you need to head over to PositiveCashFlowAcademy.com.
Because there I have video tutorials that walk you through exactly how to do it. So
head over to PositiveCashFlowAcademy.com right or if you are on your mobile phone, you can
type pca.im/academy and it will redirect you. It is not that much shorter but it is little
bit shorter and if you are driving and texting, then it will make life easier for you.
The advantages of investing in property, I have 10 advantages of investing in property
that I want to talk about today. Advantage #1 is leverage. So if you go to
your banker and you say, I have got a $20,000 deposit, I want to invest $100,000 in shares,
can you please lend me $80,000 to invest in the share marker, what do you think your banker
is going to say. He is going to say, “Hell, no I’m not going to do that, that’s too risky.
Your going to lose your money and you won’t be able to pay us back.” But if you go to
your banker and you say, “Look, I’ve got $20,000, I found this property in a capital city for
$100,000 and I want to go ahead and invest. Can you lend me 80% of the money or $80,000
to buy this property, he will say “Ryan for sure we can do that, let’s just look over
your finances, make sure you can afford it, but I’m sure that we can work something out.”
By investing in property over investing in shares or over putting in money in the bank,
you can actually secure leverage, which means your turn on investment can be high up. Let
us look at a real life example of how this would work. You have got $20,000 here to invest
in shares and $20,000 here to invest in property. With shares you just invest your money, let
us say the market goes up 10%, well that means that your share portfolio is now worth $22,000;
so it is going up $2000. Now let us take that $20,000 and leverage out banker’s money to
purchase a property for $100,000. Let us say the property goes up 10% as well. Well that
property is now worth $110,000. So you have actually gained $10,000 instead of the $2000
in the share market. Now this can obviously work in the opposite direction and you can
lose more money if you invest poorly. But you can see how leverage can help you get
better returns on your investments. Advantage #2 is stability. By investing in
the property market, many people see this as a most stable investment and that is why
the banks are generally more willing to lend you money to invest in property than they
are to allow you to invest in shares. With shares and with cash in the bank even, your
asset is more liquid, which means you can get the money out a lot faster but when you
are investing in property, it is a lot of slower process to get your money out. It is
not quite as liquid but the benefit is that the market does not tend to fluctuate as heavily
as the stock market does with the huge crashes and everything like that. Obviously, the market
does depreciate in times and we have seen that in America. I remember seeing that when
my next-door neighbor purchased a property and then sold it a year later and lost $100,000
on the property. So it does happen, but it does tend to be more stable than the stock
market for many people. Advantage #3 is that you can generate positive
cash flow from your investment property. So this is great because it means someone else
is paying off your mortgage and you are getting money into your bank as well. So rather than
investing the way most people do and invest in a negatively __4:56____ in a hope for capital
gains, you can invest in positively ______ property which generates you a cash flow return
each and every week. You can then measure that return and you might get maybe a 6%,
maybe 10%, maybe 20% cash-on-cash return each year. So that means all the cash you put in
you are actually getting 20% of that back each year plus then you have capital gains
as well. So positive cash flow property can be great because you are getting those returns
straightaway and you can get capital gains as well. Advantage #4 is capital gains and what that
means is that property could go up in value and we can make a lot of money that way. Many
investors in Australia have made their fortune in capital gains and in growth and what they
do generally use a buy and hold strategy. So they purchase the property and as many
people say properties tend to double every 7 to 10 years. So they will hold it and as
the property goes up in value, then they will increase this over time. So capital gains
can be a great thing about investing in property. We get capital gains in shares as well. So
what is the benefit of capital gains, what is the advantage over any other investment
vehicle. We will first be investing in cash and not getting capital gains, but when you
are investing in stocks again, it comes back to that leverage. We can purchase a larger
asset in the property because of boring money, then we can access more capital gains than
we could potentially access in the stock market. So that is something to consider. Advantage #5 is that you can make improvements
to your property and increase the value. I believe it will be very hard to buy some shares
and then tinker away and make those shares more valuable. You cannot do it, but you can
purchase a property that needs some __6:53____ and you can do things to increase the value
of that property. When my parents were selling their house, we got evaluation of that property
of $725,000. We then went out and spend just a $1000 on it and a couple of weeks work and
later that property sold about $825,000. So because we were able to pull that work in,
we were able to get an increased price when we sold the property and having that control
of being able to make improvements and gain that equity through adding sweat equity as
well is a great advantage of property. Advantage #6 is that you have control over
your expenses. So when you are investing in property, you have got expenses like maintenance,
management phase, council rights and all of this. So one of the great things is that you
have control over many of those expenses which leads into tax advantages. Advantage #7, which is tax advantages. So
because you have these expenses with property, you can actually use a lot of those expenses
as a tax write off and you can get appreciation on top of that as well. So what it means is
that you could actually be making money in your property. Because of these expenses and
because of depreciation, you might not even have to pay tax on your money or you might
even get a tax saving from the government because it looks on papers if you lost money
because of depreciation, but really have not had to ____8:24____ that money in that financial
year. Tax advantages in property can be great. Advantage #8 is equity growth and as we talked
about in benefit #4 is that capital gains, but what that means is as the property goes
up in value, we get what is called equity and that is the difference between the value
of the property and mortgage and that equity is great because more often than not, we can
borrow against that equity to go ahead and buy more investment properties. So this means,
we can begin to build our portfolio on the equity that we have without using any cash
out of our own pocket to pay for the deposits. So equity becomes something that compounds
on more properties you have and the more they are going up, the more equity you have to
buy more properties and so this compounding effected equity can be a great advantage to
investing in property. Advantage #9 is having control over your property.
When you invest in shares, you have no control of how that companies run unless you buy so
many shares that you get a controlling stake in the company. But in most situations and
for most investors, you will have absolutely no say on how the companies run and you will
not be able to do anything to make your investment perform better. But when you earn an investment
property, you get more control over how that property runs, who your tenants are, who you
get to manage the property and then you can also obviously make the calls on what improvements
to make on the property and you can even expand it out and may be you will subdivide or develop
the so many opportunities due to the fact that you have control over your asset. Advantage #10 is that they are not making
any more land. So we have got all these properties there on the market and the truth of the matter
is that they are not making any more land. The land that there is, is basically the land
that they have. Unless you are in Dubai and they are building those islands and pumping
sand out of the ocean and building islands and making new land, there is only going to
be a certain amount of land. So you do your research properly and you workout the supply
and demand properly of an area, the chances are that you are going to have a stable and
a great investment. Obviously, I am never going to guarantee that and the fact that
there is a limited amount of land and the population of Australia seems to be continue
to grow and does not look like it is going to stop, it means that properties highly likely
to continue going up in value. So today you have 10 advantages of investing
in property as you can say property has some great advantages that other investment vehicles
like shares or options or cash or even businesses do not necessarily have. For me, my investment strategy is to build
businesses and to get them to invest in real estate and so that is how I am going about
things. I love business, I love real estate, and I think I will be doing them for the rest
of my life. So I am a little bit biased, love investing in property, love everything that
it does, and I am sure there are some advantages of shares over property, more liquid, can
get you cash out easier, but I love property. So I am always going to be one to invest in
property. So until tomorrow, which is when the next episodes comes up, stay positive.
If you suck around__12:00_____ this long, then I do suggest that you go and you check
out the pros and cons of investment property. So rather than just looking into the advantages,
let us look some of the positives and let us look at some of the negatives of investing
in property and you can then decide whether it is for you or whether you want to use another
investment vehicle

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