Investing in the property market is an effective wealth creation strategy and method that many Australians use to get ahead financially and secure their future While managed funds and shares and other type of investments also offer opportunities to increase your wealth, some experts will say that real estate is your best bet in the current market.

Property Vs shares

There are so many reasons to invest in property, including the fact that you’re buying a real and tangible asset (an actual bricks and mortar asset ) which will be always be in demand and can be sold in the market . Stocks and companies and shares, on the other hand can lose all of their value in a day or even get liquidated or closed down. We all have l heard the horror stories, of companies falling over an stock market crashes and your money disappearing in a flash.

 

But as long as there is an increasing population, people will always need a place to live in , which makes property a more stable and attractive option.

Why property investment is better than the stock market and shares investment

Receive possibly two income’s

If you plan your investment right, you could have two income sooner than you think. A property bought at a lower price in a mining area or a area that has suddenly shot up in value will possibly put you into positive gearing and earn you a second income. When you purchase a property at today’s market value, while you hold the investment it is likely to increase in value over time, due to a favourable economy, and population growth. However, you don’t need to sell this asset to make money, you can continue to earn income from the property while you hold it and leverage of it if you want to make further investments or then just keep renting it and let it increase in value

Leveraging and using your property to grow

Property as an asset is much easier to leverage when compared with other investment options like shares due to its volatile and rapid share market fluctuations and volatility. Banks are generally comfortable to lend more for property than a share portfolio as they consider it as a low-risk investment option, and they’re also confident that they can recoup the cost as prices for property and land have historically only gone up wards.

Gain from your tax refund and save money

An investment property is tax deductible, so the Australian Taxation Office (ATO) will allow you to claim a tax deduction for most of the expenses you incur when buying and managing your investment property. If you experience a financial loss from this property. Which means that the yearly costs of owning your investment property exceed the annual rental income you receive – you can offset these losses against your income tax.

This strategy is known as negative gearing. Normally, you would receive this tax amount back at the end of the financial year when you complete your tax return, but it is also possible to receive this money in your regular pay thus giving you the added advantage that you need not even pay the difference in the mortgage repayments and rent amounts received. In other words, you can receive the tax saving during the course of the year to provide better cash flow for your daily expenses.

Long-term investment rewards for property Investment

Property values sometimes fall slightly in the short-term, but historically over the long term it always increases in value. It is also less time consuming as investors don’t need to keep up to date with daily share markets

Albany: Lifestyle features, government decisions, urban renewal

Broome: Lifestyle features, boom town, government decisions

Bunbury: Transport infrastructure, boom town, lifestyle features

Geraldton: Boom town, government decisions, transport infrastructure

Joondalup: Government decisions, lifestyle features, transport infrastructure
Karratha: Boom town, government decisions, lifestyle features
Merredin: Boom town, government decisions
Port Hedland: Boom town, government decisions
Rockingham: Ugly ducklings, government decisions, transport infrastructure, lifestyle features
Waroona: Boom town, transport infrastructure

The recently introduced New South Wales Spending spending budget packages out a number of of the most strategic property related initiatives seen to date, along with incentives targeted at enhancing housing supply and affordability instead of simply throwing money at the symptoms.

Stamp duty  Axed in NSW

The most crucial story was that stamp duty, largely considered as the single most inequitable and inefficient taxes around, has become axed for anyone people purchasing a home ‘off the plan’ and under $600,000.
An ‘off the plan’ purchase essentially means buying the house before construction is completed.
At a consumer level the advantage is clearly in the stamp duty savings which could equate up to $22,490 on a home purchase.
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2010 has been a bumpy ride for first home owners and property investors and has left many with the  idea in the mind have they or have they not done the right thing,  those are the people that took out loans and now seeing the rising interest rates ( possibly rising even more ) , investors  who bought at higher prices  when the rush for property was on and the naive people who got suckered into o to buy  a property without doing their math’s and taking into account rising interest rates and now paying the price with mortgage stress.

property sector 2010

Housing finance data released this week showed a further slowdown across the sector.

On a seasonally adjusted basis, owner occupier finance commitments for: construction of new dwellings (-7.3%), purchase of new dwellings (-3.2%), purchase of established dwellings (-2.9%) and total owner occupier loans (-3.4%) all recorded falls during March 2010.  Over the year to March 2010 only commitments for construction of new dwellings has increased, albeit by only a small percentage, 1.6%. Meanwhile, on an annual basis finance for the purchase of new dwellings is down -21.7%, finance for established dwellings is down -26.0% and total owner occupier loans are down -23.3%.

By Rp data

Other News:

CFS and Brookfield scoop property awards

Property Investment Research (PIR) has awarded CFS Retail Property Trust (CFX) as the A-REIT of the Year and Brookfield Secured Bonds as the Product of the Year at the research firm’s annual forum held this month.

Aegis buys Property Investment Research

Research house Aegis Equities Research has bought Property Investment Research (PIR). Aegis plans to continue to run PIR as a separate business, but will expand the services it offers. It will widen the coverage of the property sector from the current 200 companies to the top 500 companies

Well at least there is one good news for property investors with the new Henry report document that has been released , negative gearing is not going to be affected. This is going to encourage people to invest in property and therefore create more  dwellings  for the new influx of the ever expanding australian population

Investing when young can make you a millionare

Recently  friend of  mine  ( age  26)said he was a bit hesitant with   investing  in his second property given the Henry review was just coming out and things were uncertain , but now that things are not changed with property investment  , he is going ahead with looking out for a good property in caning vale australia. Mind you this area has already gone through a big price boom in the last couple of years.

what  is his  investing strategy ?

He  has  already invested  in a land and house package at $360 k  and now  has decided  to make it into an investment property. Given that  the loan is a interest only loan he will  not be paying a   huge amount on the  loan repayments and  the rent derived will cover part of the repayments. The House was about 200k so he will be able to claim full depreciation as it is new house ( which will be approx $5000). Now given that  he  would  have already paid the shortfall in repayments of the loan from his own wages from job for this whole year. Come tax time he would be getting  5 k worth of depreciation plus negative gearing on expenses on the house. This money which he saves as tax deductions if he  puts aside  for next year , he would possibly not have to  put any more money into this investment for the rest of  his life.

If he is lucky enough and there was a substantial price growth in this house  , he would be looking  to  go forward with his next house  in caning vale  and create another investment and possibly  be one of those property millionaires in a couple of years.

Punters need to keep in mind  , they would have to afford the deposit on their first house , plus the  Bank mortgage insurance if it is  a investment property or then if it is even a second investment property. Lucky punters who have had substantial growth in their first investment would not have to worry about this  as the equity gained could be used to take care of the mortgage insurance in the second investment. Now my friend could possibly even retire  at 35 with the right kind of luck with sensible decision making  with his property investments.

Good luck  property with your investing

Article by sheldon singh

Get your great aussie dream now

The dream is not lost , most Australians with a job definitely can get a home of their own. The idea is to forego that the first property is going to be your dream home. Buy one that will be a good rental home. Keep your budget to the minimum for your first property but do keep in mind the rental value in it while purchasing.

Get your dream home now

The theory is that you live in the first property for eight to 10 years, over which time it should gain in value. You then use the equity in the first property, and the amount paid down to get into a bigger property, which you also keep.

“If you buy at 30 for $ 250,000 to 350,000, then by 40 or 45 you’ll be looking at moving into your own  Dream family home.

“Westpac Bank announced last week that the maximum loan-to-value ratio for their new customers is 87 percent.  That means that instead of the ideal 10 percent deposit required, Westpac now demands a minimum 13 percent deposit.With banks tightening up on lending criteria, a good-sized deposit is your best option in the housing market right now.

Save on your loan Tricks and tips

The most important thing to understand on your loan that the bank wont tell you is that interest is calculated on a daily basis ( on that large loan amount you have ) and charge to the account monthly in arrears. So if you actually can save say $300 dollars a month  extra  or then just even a couple of dollars  to put towards your loan ,y0u can reduce this daily balance  and you can be thousand of dollars  ahead over the term of your loan.

Example ( saving on Interest home loans and shortening the loan term ):

Say you got a $300,00 mortgage for a standard variable rate of 5.85 % over 30 years

You get a bit of extra cash  or manage to save a extra $500 which you have now put towards the loan.

By doing this you would cut the overall term by one month and save almost $2400 in interest. Imagine the savings if you increased these  extra amount repayments  or then did the same every year

( Savings and terms of loan  can vary based on bank terms and conditions and they way these amounts are calculated by each bank)

Similar Home loan savings can be  got by also using offset accounts

A mortgage offset account is simply a savings account linked to your loan account. Over time, savings in your offset account can help to reduce the loan principal, allowing you to pay off your loan sooner or build up equity.

An example of an Offset Account

Peter and Shiela have a $300,000 mortgage and have a 100% offset account with total savings of $30,000.

This means that Peter and Shiela owe $300,000 towards the principal amount but will only have to pay interest on $270,000 of this as the offset reduces the principle upon by $30,000.

Mandurah and Derby also appeared on last year’s list and, like Withers, saw substantial price falls during 2009 of 16.4 per cent and 10.8 per cent respectively.

Falling prices in coastal areas were largely attributable to buyers over-capitalising and then being forced to sell, with several seaside suburbs also seeing significant discounting by homeowners trying to offload properties.

country properties for sale

Price

$60,000

86 Vince Street PIESSEVILLE

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• Street View

PEACEFUL IN PIESSEVILLE
This 3 acre block is the only one left for sale in the Piesseville town site. Situated in a quiet & secluded location with a natural bush corridor between it & the Great Southern Highway. Pastured land with some bush…

Agent Details

Ray White Narrogin
23 Egerton Street
Narrogin WA 6312

or contact 9861 2640 as advertised in quokka

Listing:http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008126642

More about Piesseville : http://en.wikipedia.org/wiki/Piesseville,_Western_Australia

The first-home owners grant will be restricted to people buying homes worth up to $750,000 from next year amid fears the market is overheating.

Fierce competition that started late last year in the lower end has now expanded into the mid to upper sectors. A surge of Australian investors is also gaining momentum.Buyers of all budgets are increasingly concerned that missing out will mean a wait until autumn, when prices and interest rates could be greater.

On October 1, the first-home owners boost was reduced from $14,000 to $10,500 for existing homes and from $21,000 to $14,000 for new homes. The grant will be lowered to $7000 for both new and established homes from January 1.

Change to First Home owner grant

Each state and territory government would be allowed to cap the ”enormously successful” grant, federal Housing Minister Tanya Plibersek confirmed yesterday.

The real estate crush has already contributed to a 1 per cent rise in the headline rate of inflation for the September quarter, the highest rate for a year. It makes a Melbourne Cup Day interest rate rise of 25 or even 50 basis points almost assured, as the Reserve Bank moves to tackle inflation before it gets out of control.

In NSW, Western Australia and the Northern Territory, only homes less than $750,000 will receive the $7000 grant. In Victoria, the cap will be set at $600,000 while Queenslanders will be able to pay up to $1 million and still receive the bonus.