If you are moving house to upsize or merely change location, then it is certainly worth considering keeping your existing home as an investment property. The investment in property has made more Australian Millionaires than any other industry and, whilst it may not be everyone’s forte, there are some simple reasons for this success.
Property investment is a solid investment because you are receiving something tangible. Unlike stocks and shares, the market remains stable and fluctuates only by very small amounts, making investments safe. Getting onto the property ladder is the hardest part of the process, so if you have a home it is seriously worth considering hanging onto it. This article considers some of the important factors.
Investment in property has one considerable benefit over all other forms of investment. This benefit is the fact that banks are willing to loan you the money for the investment. The reason that this situation occurs is because the house is a tangible entity that can be used as equity for a loan.
When keeping an existing property and moving into a new one, it then becomes possible to draw from the equity of both properties and secure a much larger loan. Whilst taking loans beyond your means out is certainly not sensible, if you can realistically pay back the loans in the long term, then property investment is perhaps one of the safest routes to securing wealth.
Investments that Work For You
Property is an investment that you can get to work for you. Renting out a property to tenants provides a diversification of your income that can actually help you to pay off the investments that you have made. Whilst rent will not cover all repayments, insurance, taxes and other costs, it certainly will enable you to reduce the level of these and increase the speed at which you are able to pay back your loans and turn your borrowed equity into owned equity. As you expand your portfolio of properties, you will quickly see a snowballing effect taking place and will be able to continue your investments whilst reducing your repayments.
Preparing a Property for Rental
Renting a property does add some complications to your life because there is a minimum level of quality that needs to be provided and you will be responsible for maintaining this.
When moving out into your new property it is important to consider what should stay and what the removalists should take to your new home. You will necessarily need to buy more furniture to lease your property as furnished, so you will need to decide on whether to buy new furniture for your new home or for the rented property.
Other factors, like dishwashers and washing machines need to be considered, as a tenant will expect these to be offered with the home. When preparing for rental it is important to consider the potential tax breaks available with regards to depreciable items because this can make a huge difference to the setup costs too.
To Sell or Not to Sell
Whether or not to sell your property is one question that will take serious consideration. As this article demonstrates, there are a huge number of benefits to keeping and leasing your property.
When investing in property it is important to avoid negative equity, where the property is worth less than the loan. Selling may seem financially sensible in the short-term, but the investment in property has made a lot of millionaires and that is certainly something worth striving for.