Why Residential Property
RESIDENTIAL REAL ESTATE - SIMPLY AND BRIEFLY
If you look at the results others have achieved, you have to say that property makes pretty good investment sense. According to the BRW Rich 200 list published each year, property has consistently been the major source of wealth for Australia's multimillionaires. And it's the same all over the world.
Anyone can do it
Despite the concept of property belonging to the rich, it has been shown over and over again that careful and intelligent use of real estate can enable ordinary Australians, like you and me, to become millionaires in about 10 years.
This is partly because banks will lend up to 95% and sometimes even 100% on the security of residential property which means most Australians with a steady job and a little capital behind them can invest in real estate.
When everyone says that residential real estate offers the security of "bricks and mortar", this really means that even allowing for the ups and downs of real estate values that we hear about, the underlying trend of property prices in the major residential markets such as Melbourne, Sydney and Brisbane has been steady growth.
Unless you bought at the absolute top of the market, and paid too much for your property, it is unlikely that your investment property would significantly fall in value.
The rental income you receive from your investment property allows you to borrow and get the benefit of leverage by paying the interest on the mortgage.
Residential property has an unequalled track record of producing high and consistent capital growth. Not only have property values grown, but they have consistently outperformed inflation by 2 to 3%.
This means that house prices have doubled every 7 to 10 years. In Brisbane, Melbourne and Sydney. This growth has averaged just under 10% compounding per year over the last 20 years.
These are just averages. The better your property selection - where you buy, what you buy, how well you negotiate and how you finance your property investment - the better your returns could be.
Because of its history of security, stable income and proven capital growth, residential real estate is regarded as a prime security or collateral for loans. This enables you to borrow and purchase a bigger investment property and take advantage of the concept of leverage.