Tim's advice for the investment buyer...
Over the years I have bought investment properties. These purchases have made the difference in my life of looking forward to a comfortable retirement rather than the alternative.
It is true that at times the value of property goes up and sometimes it even goes down. Usually the rent that I get goes up but occasionally it goes down. However, across any decade, the trend is always up. Substantially up.
Back in the time when negative gearing was king, property investment was a legitimate, effective basis on which to select a property. In those days inflation was running high and the tax benefits more than compensated for the actual shortfall between rental income and holding costs. With inflation running at a much lower level at the moment, there are other criterias becoming the primary factor in property selection.
Over the years some of the investors that we have worked with have accumulated up to fifty properties. They have done this without big salaries. Without significant wealth behind them. What they have all had though, is the willingness to learn about why some properties work better than others and then they have had the courage to make a decision.
During that time literally dozens of others have gone oh so close to making the decision to purchase. All the way through the process of selecting the property. At the last minute however they have backed out. Some of those people have no regrets. They know that they would worry too much to make long try investors. Some of them now live with regret. Most of us know someone who says, see that property, I could have bought that for $xx. Look now it is worth four times that.
That is the regret that I am talking about.
The GFC (Global Financial Crisis) has given many people a rare opportunity. An opportunity to secure a property at the same price that they would have needed to pay way back in 2007. That's right some property prices have come back that far. No one has a crystal ball but I together with thousands of investors are confident that yet again over the ten year period (by 2017) those properties will have jumped significantly in value.
Some investors buy property for the income
An extra few thousand dollars income each year (per property) can make a huge difference to life style in retirement.
Some buy for capital growth
To have an extra hundred or two hundred thousand dollars in the bank by selling an investment property or two at retirement can provide great peace of mind.