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Property Investment

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Harcourts Vision have developed a comprehensive guide to property investment.
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Why Investment in Property is Good

• Very free market

  Purest form one can have, relying totally on supply and demand

  No taxes, tariffs or constraints

• Legally very safe

• No capital gains tax under current legislation)

  Most other countries have it, including Australia

• Inflation and interest under control

  Adds stability

• Good capital growth

• Retirement security

• Wealth

• Tax advantages

  Ability to write off losses against principal income

  Depreciation of dwelling forever

  Depreciation of chattels

  Deductibility of establishment and holding costs

• Government Policy

  Changing responsibilities

  Encouraging private rental market

  Housing subsidies for low income families

• Very high security

  No lending institutions will lend as heavily against anything else

• Permanence

  One of the two basic requirements of man; food and shelter

  Won't go out of fashion

• Leverage of money possible

  By using a small amount of money one gets the advantages of a large amount of money

• Right part of the economic cycle
• High internal rates of return

  Leverage

  Capital growth

  Tax advantages

  Inflation indexed income
  

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What will 100 people be doing at age 65?

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The three types of property person

• Speculator

  Moderate short term input for one-off moderate capital gain (non-compounding)

  High holding cost

  Moderate tax
  

• Developer

  Full time high input for one-off capital gain

  Very high holding cost

  High tax
  

• Investor

  A very passive role holding property long term for capital growth and future wealth

  Minimal holding cost if any

  Tax concessions

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Leverage or Gearing?

• The one factor that makes Residential property investment so much more attractive than most conventional investments is the ability to utilise leverage (or gearing) of your money.

• This can multiply your gain by up to 3, 4, or 5 times.

• Both tenant and the taxman combine to fund approximately 100% of the investment’s holding costs while the owner enjoys the CAPITAL GROWTH of the full value of the property, not just on their equity share.

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Finding the deposit

Utilising your current equity

Many people have a high amount of equity in their family home. Much of this equity is simply not working for them to its fullest potential. By moving some of their equity from their family home to investment properties, their capital growth can be dramatically increased.

Let’s take the example of Mr & Mrs Jones who own a $150,000 property with a $50,000 mortgage.

The Jones’ have not reduced their equity in real estate they have simply redistributed it.

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Who pays the first year's costs?