Property investment can be a great way to make extra money and to even make enough money
to retire from your full time job.
How can you make money from property investment?
Hi I'm Ryan Mclean and I'm from positivecashflowaustaralia.com.au where we teach people like you how to find
and invest in positive cash flow properties.
Today I want to talk about the three and the only three ways you can make money from property
investment.
There are a lot of different strategies you can use to make money from property, but they
all center around making money in just three different ways.
Whether you invest in positive cash flow or negatively geared property whether you invest
using options or you create developments or you sub-divisional stradurtidling, all of
these different investment strategies all utilize just three ways of making money through
property investment That's why I felt that it was important to
talk about these three ways of making money today, by understanding these three ways of
making money through property investment, you can then begin to assess which method
you want to use to make most of your money and you can begin to assess properties based
on how they make their money and whether they fit your financial goals.
Money making method number one is cash flow, and what cash flow is, is when the property
generates more income than you're paying in expenses and then generates you a positive
cash flow.
This means that overtime you may be able to pay down your debt, or you may be able to
take that extra cash flow and fondle that into other investments or into your life as
well.
Cash flow is great because you get it every single month and what it means is that you
will get a return on investment of your money delivered overtime as the cash flow comes
in.
The second way to make money from property investment is through capital gains, capital
gains is when the value of the asset that you buy goes up overtime, you know how they
say that property doubles up every seven to 10 years.
They are talking about making money through capital growth, or through the increase in
value of the property.
If you purchase a property for $300,000 and in 10 years' time that now it's worth $600,000,
well this is $300,000 in growth that you've had on that property, and you've made money
in capital growth.
This is another way that investors like to make money through property.
Method number three is tax savings, one of the great things about property is that you
can actually make tax savings on the tax that you pay on your job, and that comes back to
you as a refund because of your investment in property.
The primary way that people will do this is through depreciation of the property, this
is through depreciation of the building itself and also through depreciation of things like
the fixtures and the fittings inside the building.
What happens is these items depreciate over time and they cause a loss in paper, they
call it a non-paper loss because you are not actually dishing money out for these loses
each year but because the values going down you can actually claim that as a loss in the
financial year.
You are not actually dishing out any money out but you are claiming that loss you can
get generally attached refund on that loss which means you are actually can be making
money from property without actually making money.
I do suggest that you speak to a professional tax accountant whenever you do claiming anything
on your investment property because there's a fine line between maximizing your tax savings
and actually doing tax-aviation which is illegal.
There you have the three ways to make money from property investment, again they are cash
flow, capital gains and tax savings.
If you want more videos, articles or podcasts like this one then head over to positive cashflowaustralia.com
and until next episode which is tomorrow stay positive.