Property, shares, business, options, you can even put your money in cash.
There are so many different ways that you can invest your money and so many great ways
that you can invest your money and achieve financial freedom that I wanted to talk about
some of the advantages of investing in property.
Property, I believe, is a great investment vehicle, but they can all be great investment
vehicles.
So what are the advantages of property over things like shares or holding in money in
cash and why should you consider investing in property.
I am Ryan McClain from PositiveCashFlowAustralia.com.au and I teach people like yourself how to find
and invest in positive cash flow properties.
If you a step-by-step guide, you want me to walk you through the process of exactly how
to find positive cash flow properties, then you need to head over to PositiveCashFlowAcademy.com.
Because there I have video tutorials that walk you through exactly how to do it.
So head over to PositiveCashFlowAcademy.com right or if you are on your mobile phone,
you can type pca.im/academy and it will redirect you.
It is not that much shorter but it is little bit shorter and if you are driving and texting,
then it will make life easier for you.
The advantages of investing in property, I have 10 advantages of investing in property
that I want to talk about today.
Advantage #1 is leverage.
So if you go to your banker and you say, I have got a $20,000 deposit, I want to invest
$100,000 in shares, can you please lend me $80,000 to invest in the share marker, what
do you think your banker is going to say.
He is going to say, "Hell, no I'm not going to do that, that's too risky.
Your going to lose your money and you won't be able to pay us back."
But if you go to your banker and you say, "Look, I've got $20,000, I found this property
in a capital city for $100,000 and I want to go ahead and invest.
Can you lend me 80% of the money or $80,000 to buy this property, he will say "Ryan for
sure we can do that, let's just look over your finances, make sure you can afford it,
but I'm sure that we can work something out."
By investing in property over investing in shares or over putting in money in the bank,
you can actually secure leverage, which means your turn on investment can be high up.
Let us look at a real life example of how this would work.
You have got $20,000 here to invest in shares and $20,000 here to invest in property.
With shares you just invest your money, let us say the market goes up 10%, well that means
that your share portfolio is now worth $22,000; so it is going up $2000.
Now let us take that $20,000 and leverage out banker's money to purchase a property
for $100,000.
Let us say the property goes up 10% as well.
Well that property is now worth $110,000.
So you have actually gained $10,000 instead of the $2000 in the share market.
Now this can obviously work in the opposite direction and you can lose more money if you
invest poorly.
But you can see how leverage can help you get better returns on your investments.
Advantage #2 is stability.
By investing in the property market, many people see this as a most stable investment
and that is why the banks are generally more willing to lend you money to invest in property
than they are to allow you to invest in shares.
With shares and with cash in the bank even, your asset is more liquid, which means you
can get the money out a lot faster but when you are investing in property, it is a lot
of slower process to get your money out.
It is not quite as liquid but the benefit is that the market does not tend to fluctuate
as heavily as the stock market does with the huge crashes and everything like that.
Obviously, the market does depreciate in times and we have seen that in America.
I remember seeing that when my next-door neighbor purchased a property and then sold it a year
later and lost $100,000 on the property.
So it does happen, but it does tend to be more stable than the stock market for many
people.
Advantage #3 is that you can generate positive cash flow from your investment property.
So this is great because it means someone else is paying off your mortgage and you are
getting money into your bank as well.
So rather than investing the way most people do and invest in a negatively __4:56____ in
a hope for capital gains, you can invest in positively ______ property which generates
you a cash flow return each and every week.
You can then measure that return and you might get maybe a 6%, maybe 10%, maybe 20% cash-on-cash
return each year.
So that means all the cash you put in you are actually getting 20% of that back each
year plus then you have capital gains as well.
So positive cash flow property can be great because you are getting those returns straightaway
and you can get capital gains as well.
Advantage #4 is capital gains and what that means is that property could go up in value
and we can make a lot of money that way.
Many investors in Australia have made their fortune in capital gains and in growth and
what they do generally use a buy and hold strategy.
So they purchase the property and as many people say properties tend to double every
7 to 10 years.
So they will hold it and as the property goes up in value, then they will increase this
over time.
So capital gains can be a great thing about investing in property.
We get capital gains in shares as well.
So what is the benefit of capital gains, what is the advantage over any other investment
vehicle.
We will first be investing in cash and not getting capital gains, but when you are investing
in stocks again, it comes back to that leverage.
We can purchase a larger asset in the property because of boring money, then we can access
more capital gains than we could potentially access in the stock market.
So that is something to consider.
Advantage #5 is that you can make improvements to your property and increase the value.
I believe it will be very hard to buy some shares and then tinker away and make those
shares more valuable.
You cannot do it, but you can purchase a property that needs some __6:53____ and you can do
things to increase the value of that property.
When my parents were selling their house, we got evaluation of that property of $725,000.
We then went out and spend just a $1000 on it and a couple of weeks work and later that
property sold about $825,000.
So because we were able to pull that work in, we were able to get an increased price
when we sold the property and having that control of being able to make improvements
and gain that equity through adding sweat equity as well is a great advantage of property.
Advantage #6 is that you have control over your expenses.
So when you are investing in property, you have got expenses like maintenance, management
phase, council rights and all of this.
So one of the great things is that you have control over many of those expenses which
leads into tax advantages.
Advantage #7, which is tax advantages.
So because you have these expenses with property, you can actually use a lot of those expenses
as a tax write off and you can get appreciation on top of that as well.
So what it means is that you could actually be making money in your property.
Because of these expenses and because of depreciation, you might not even have to pay tax on your
money or you might even get a tax saving from the government because it looks on papers
if you lost money because of depreciation, but really have not had to ____8:24____ that
money in that financial year.
Tax advantages in property can be great.
Advantage #8 is equity growth and as we talked about in benefit #4 is that capital gains,
but what that means is as the property goes up in value, we get what is called equity
and that is the difference between the value of the property and mortgage and that equity
is great because more often than not, we can borrow against that equity to go ahead and
buy more investment properties.
So this means, we can begin to build our portfolio on the equity that we have without using any
cash out of our own pocket to pay for the deposits.
So equity becomes something that compounds on more properties you have and the more they
are going up, the more equity you have to buy more properties and so this compounding
effected equity can be a great advantage to investing in property.
Advantage #9 is having control over your property.
When you invest in shares, you have no control of how that companies run unless you buy so
many shares that you get a controlling stake in the company.
But in most situations and for most investors, you will have absolutely no say on how the
companies run and you will not be able to do anything to make your investment perform
better.
But when you earn an investment property, you get more control over how that property
runs, who your tenants are, who you get to manage the property and then you can also
obviously make the calls on what improvements to make on the property and you can even expand
it out and may be you will subdivide or develop the so many opportunities due to the fact
that you have control over your asset.
Advantage #10 is that they are not making any more land.
So we have got all these properties there on the market and the truth of the matter
is that they are not making any more land.
The land that there is, is basically the land that they have.
Unless you are in Dubai and they are building those islands and pumping sand out of the
ocean and building islands and making new land, there is only going to be a certain
amount of land.
So you do your research properly and you workout the supply and demand properly of an area,
the chances are that you are going to have a stable and a great investment.
Obviously, I am never going to guarantee that and the fact that there is a limited amount
of land and the population of Australia seems to be continue to grow and does not look like
it is going to stop, it means that properties highly likely to continue going up in value.
So today you have 10 advantages of investing in property as you can say property has some
great advantages that other investment vehicles like shares or options or cash or even businesses
do not necessarily have.
For me, my investment strategy is to build businesses and to get them to invest in real
estate and so that is how I am going about things.
I love business, I love real estate, and I think I will be doing them for the rest of
my life.
So I am a little bit biased, love investing in property, love everything that it does,
and I am sure there are some advantages of shares over property, more liquid, can get
you cash out easier, but I love property.
So I am always going to be one to invest in property.
So until tomorrow, which is when the next episodes comes up, stay positive.
If you suck around__12:00_____ this long, then I do suggest that you go and you check
out the pros and cons of investment property.
So rather than just looking into the advantages, let us look some of the positives and let
us look at some of the negatives of investing in property and you can then decide whether
it is for you or whether you want to use another investment vehicle