Australians love property. Property offers home-owners the opportunity to become investors. We love to make a house our home. We like to renovate and decorate – knowing that our hard work will be rewarded with an increase in the property value.
Property as an asset class, offers investors lucrative returns. Over the past century, investors have watched property prices increase exponentially. Investors can trust that property will continue to grow over time, because there is an overall growth trend, regardless of the volatility of property cycles.
Every investment class has its own level of risk and reward. For example, shares are extremely volatile and carry high risk, because they are tied to the performance of a company. Most companies have a limited shelf-life and unpredictable growth cycles. Property can offer similar returns as shares, but for a much lower amount of risk.
Here are 5 reasons why property is the best investment option of all asset classes.
1. Double Income
Shares provide income in the way of dividends and capital growth from the increase in share price. Dividends are determined by company profit and share prices rise and fall regularly. Property also offers double income from rents and capital growth, however the property market moves in slower and more predictable cycles, which means there is no dramatic change to rental income when the market changes.
2. Investor Confidence
Property is a tangible asset. You can touch it, see it and it exists in the world. Many investment assets are intangible, so they are not understood in the same way. It is property which gives the general population the most confidence, when it comes to investment classes. Confidence is based on economic conditions, it is highest in an upward moving market. However, there are other factors such as population growth, which keeps property in high demand as an investment class.
3. Low capital investment
Money markets or short-term securities are out of reach for most investors, because they require a very large amount of capital to invest. Bonds are more affordable to acquire, but offer very little capital growth. Shares offer the cheapest entry point for investors, however you need to invest a higher amount for higher returns. Property on the other hand, can provide high returns for a relatively low deposit. Whilst it is not the cheapest way to invest, property offers the safest way to leverage debt.
4. Ease of Finance
Banks secure loans with property because it is a tangible, low risk asset. This makes it easy to get a loan for a property, which means cheaper interest rates and a large variety of lending options. The banking industry watches the property market closely and will adjust LVR and interest rates according to economic conditions.
5. Freedom & Flexibility
Property is the only asset class that allows the investor to add value. An investor can renovate, change the layout, change the number of bedrooms, add or subtract features from the property, all without restriction. Direct property investment means the investor who owns the title, can buy and sell when they choose, distribute income how they choose, without permission from a property manager or fund manager.
At JR Prosperity Partners, we believe property is the best asset class to achieve financial freedom. We specialise in helping investors achieve success through property investment. Contact us today on 1300 522 562.
