5 ways property investments make money for you
Before we’ve discussed how you can use Self Managed Superannuation to start your property portfolio. With the proposed changes to Australia’s retirement age and unknown future changes to superannuation policies, including withdrawal ages, tax concessions, perhaps now is the time to consider using your existing super for property.
A key feature of property investing is the stability of income over the long term. This is particularly attractive to
investors near or in retirement. Here’s 5 ways property investments can increase in value and provide ongoing cash flow to you:
1. Appreciate the increases in value
Any increase in investment property value over time is an excellent source of profit to you. Of course, we cannot predict that this trend will always be true, and it varies significantly by area. This is why thorough research into any areas you’re considering purchasing in is undertaken.
The research will help you maximise your return by identifying key indicators/drivers of continued growth. A lot of potential investors tell us that they more feel comfortable buying a local investment property. They like that they can simply “drive-by” and check their investment. However, many fail to understand that the return /appreciation of a local property could be significantly lower than buying an interstate.
2. Inflation is your friend
Inflation is one factor that drives up rents. Population growth creates housing demand, again driving up rent prices if supply cannot keep pace.
3. Renovations= increased ongoing value
Minor upgrades to the appearance of your investment property can increase value. As trends and
styles change, keeping your property interesting to renters will at the very least help you to retain
value or provide you with greater returns when it’s time to sell.
4. Cash flow from rental income
As with a stock that pays dividends, a properly selected and managed rental property should provide a steady stream of income in the form of rental payments. When correct research is undertaken before purchase, you’ll understand which areas have higher rental returns, lower tenancy vacancies and are in a growth area, you increase your chance of higher than average, consistent rental returns.
5. Paying off your mortgage
As you pay off your mortgage, the increase in equity can be used for other purposes and investments. Though it’s frequently accessed by selling the property, a property investor can also
take out equity loans if the terms are right and use those funds to increase their property portfolio!
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