In the year 1086, King William I of England had recorded a list of all the land values in England. Since then, real estate value has increased in England at around 10% per annum. Property values in Australia have increased at about the same rate since records have been kept here.
It is that compounding effect of property value increases which is so powerful. From history we know that the value of real estate will at least double every 7-10 years. This means the property value will grow faster every year.
It is a well established fact that the wealthy people in all countries have a large investment in real estate, and this helps to maintain their wealth.
Why real estate as opposed to other forms of investment ?
Many types of investment options are available and some offer big returns, but have a high risk. Direct investment in property is a low risk strategy with good long term returns on investment.
Secure Growth Investments finds properties at market value in high growth areas with low risk. Investors buying quality property will get a great return over time.
Because the risk is very low, you can borrow money up to 90% of the real estate value, leveraging the investment by using the banks money. In other words, you get the capital growth on the full investment value while you only need 10% of your own money.
When you borrow money to purchase an investment property, you can claim a tax deduction for all the expenses of that property including the loan interest. Your tax refund, along with your rental income are used to pay off your loan and you only need to contribute a small amount of money.
In 7-10 years time, the tax man and your tenants will have paid most your expenses and your property will have more than doubled in value. Most investors will keep investing in the properly market to provide income for their retirement fund.
How Much does it Cost ?
To buy an investment property, you need 10% to 20% of the value of the property and you can easily borrow the remainder. If you have owned real estate for a number of years, the value of the property will have increased. You can use this value of your real estate for the 10% to 20% deposit.
To buy an investment property, you need to reserve it with a AUD$2,000.00 deposit. Then the Contracts are prepared and you have 2 weeks to decide if you wish to proceed with the purchase. If you decide not to proceed before the contract is issued the AUD$2,000.00 is fully refundable. After the contract is issued you only get the AUD$1,500.00 refunded. If you do proceed to buy the property, the AUD$2,000.00 is included in your 10% deposit.
You need to pay for legal fees, and the Bank will allow you to add these onto the loan account.
In NSW and Victoria you do not pay stamp duty on new real estate. Have a look at the Government Weblinks page to find how much stamp duty you will need to pay . Government Weblink
So you don't need a lot of money to start investing in real estate.
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