There are two main types of property buyers – home buyers and investors.
Home buyers look for somewhere to live that meets their personal and emotional needs, which might be a home near a school, work or family or provide a lifestyle they enjoy. Investors are more concerned with wealth creation.
Why is property investment attractive? With home loans rates so exceptionally low, the interest you get on your savings in the bank also so low – and the overseas travel money going unspent – why not!
There are successful investors in their twenties, thirties and right through to retirees. Many of the latter, in particular, are looking for better returns on savings than the more traditional interest-bearing bank accounts.
Take 74-year-old Nancy* for instance. She had $850,000 in a term deposit earning 2.7 per cent interest, which then dropped to under one per cent. Rather than dipping into her capital, she bought two rental units and now earns enough from them to meet her living costs and personal needs.
With property, you can invest and take advantage of growth.
A good property investment might take five or 15 plus years to mature.
Real estate agents are experiencing a shortage of listings in many markets currently, and there is a lot of messaging out there about opportunities to sell and make good dollars.
Some of this messaging is bound to come the investor’s way. It may be tempting to jump in, sell up and ‘cash in on the property boom’.
However, if your goal as a property investor is to set yourself up for a happy and financially secure future, then prematurely selling your investment property may be absolutely the wrong thing to do.
Many property experts, as well as major banks and economists, are predicting markets to perform even better over the next two or three years at least. Demand is outpacing supply and with little land availability in many markets, prices may be expected to continue rising.
Now may not the time to sell the investment property. But it may be the time to use the equity that has built up in your investment property to try and secure another.
Imagine having two or three properties benefitting from such times of solid growth, building your wealth over the longer term!
(*not her real name)