Can I Make Money from Real Estate

Can I Make Money from Real Estate?

It is a common question and one that I hear asked weekly and the answer is YES, you can make money from Real Estate.

I have been investing in real estate for over 30 years now, and as far as long-term investments go  – you really can rely on real estate.

I bought my first investment property at the age of 16 as I figured out capital growth patterns; this was something that was of great interest to me as I could see property increasing in value on a consistent basis.  Yes I’ve had some ups and down – the GFC being the biggest hit over the years but long term the growth has been very reliable.

Yes you need to do some research, yes you need some capital and yes you need someone to talk to that you can trust in the industry, as well as good financial advice.

So how do you actually make money – how do you get started..

1.     Have a plan

2.     Find an area that is showing signs of future capital growth

3.     Secure a property with location in mind, close to water is a fave of mine.

4.     Arrange competitive finance

5.     Tennant the property

The benefits

Property growth – ie an increase in the price of the property

• You obtain income from the property
• Any payments made by you (expenses) that are greater than the income from the property is classed as negative gearing, allowing you tax relief from this amount.
• Every 5-10 years inflation will rise beyond that of the current long term debt – allowing you to borrow more against this property to invest further into property.

 Money in – money out

• Every investment is seen as incoming money (usually rent) and outgoing money (expenses) here is how this works..
• “positive gearing” If the incoming money is greater than the outgoing money; This is called “positive gearing”
• “natural gearing” If the incoming money is equal to that of the outgoing money; This is called “natural gearing”
• “negative gearing” If the incoming money is less than that of the outgoing money; This is called “negative gearing”
• Example of negative gearing below…
  • Purchase price – $400k
  • 10% deposit
  • Borrowings $360k
  • Expenses – @ 6% $21,600 plus expenses (rates, taxes, management fees, maintenance etc) $6k = $27,600
  • Incoming money (rent) @ $400 PW = $20,800
  • Here we are negatively geared at $6,800 (tax deductible)
  • If the capital growth of this property is better than the loss (after tax relief) – you’re in front!!

 Examples of different types of investment and their returns

• High capital growth – lower rate of income
• Low capital growth rate – high rate of income (commonly seen in the mining sector of WA)
• Proposed future development areas

So in summary, Ideally you’re looking for a sound property in an area that is primed for growth – you’re looking to rent the property and after costs be at a naturally/slight negatively geared level with the property.

This means that as the property increases in value, and at the same time your debt decreases your holding of this property becomes stronger.

 

I would strongly recommend speaking to a financial advisor before doing anything, as they’ll advise you of what to look out for such as..

• Increase of interest rates and its impact on your investment.
• A fall in the market value

So – yes you can make money from real estate – just make sure you talk to someone in the industry first.

John Kemsley – Principal

0419 917 209

Buying Real Estate in Perth

Buying real estate in Perth is always a good decision – long term decision that is.

Here are some key reasons why buying real estate in Perth it can be a great decision for your future:

1.    It is safe – research shows that Australian property has increased in value at a rate comparable to the share market since the late 1920’s.  Plus, with along term average of  over 10% per annum(closer to 11%) and it has done this through wars, floods, fires, recessions and crises. Plus property has been much more steady than the stock market.

2.    It is easy to research.  Just pick a state, pick the top performing suburbs using long term stats and then research those areas in regards to infrastructure investments, local amenities eg schools, parks, shopping and transport and then read and study.  You could safely make an pretty well informed decision in a couple of weeks.  Also, make sure you talk to your local agent and people in the know including local council.  Check out some great investment options here

3.    It is quite easy to get finance – assuming you are working, have a job history and have done your research.  Lenders like property for the reasons mentioned above. Lenders are more likely to lend on property than any other asset.  There are so many organisations and institutions geared up to help you get into property and into investment too.

4.    There are flexible investment options like:

a.    Long term growth

b.    Positive cash flow

c.    Renovating

d.    Developing

5.    You are in control – once the property has settled you have control over it and do not need a broker.  You can make decisions on what to do, who to rent to etc

6.    Tax breaks – there are some great tax breaks to be had with the right investment – talk to your accountant for details on how this can work for you

7.    A property is an investment you can use if you need to. You might decide to live in your property at some point, or extend to family members or friends

8.    In Australia, demand it outstripping supply plus we have a steady stream of immigrants coming in Western Australia every day with a long term plan to increase these numbers steadily.

Rest assured that although there are a few road humps, the Australian economy is robust and strong.  Plus, one day you can pass your investment on to your kids or look at it as a source of on going income in future years.

If you would like to discuss investing in Perth, then simply contact us to arrange a confidential chat.  Click here to contact us

Article by John Kemsley – Platinum Realty Group

Real Estate in Perth Northern Suburbs

 

If you are thinking of selling your home or finding a Property Manager in Perth’s Northern Suburbs, then you really must consider Platinum Realty Group as an agent to consider.  

Platinum Realty Group have been consistently selling over 100 million worth of property every year for 15 years.

OUR SERVICES

We aim to be your total solution in real estate, delivering on all services related to property.

Our services are as follows…

Property sales: Our team of sales professionals are all highly experienced Award Winning Agents who work as a team and in your best interests at all times. Platinum Agents utilise outstanding systems and procedures along with innovative marketing plans that ensure your property gets sold on time. We specialise in all areas of residential and commercial sales, all areas with an interest in Perth’s Northern Suburbs.


Property management: Our Asset Management Team are amongst the best in the industry and are all experienced and have an abundance of knowledge. We work closely with you, ensuring you are kept up to date with market conditions, that your property is kept in excellent condition and to ensure you receive the highest rent on time, every time. At Platinum we work with you to protect your capital growth whilst securing the greatest returns on investment for you.



Property maintenance: At Platinum we have our own in house maintenance people, who will look after your investment. Platinum maintenance people are all qualified professionals, reliable and very competitively priced.



Finance: Platinum Realty Group can offer in-house financial advice from our own Platinum endorsed financier who we can recommend to our clients. Our financier is available to you 7 days a week. 



Investment advice: Over a decade and a half, we have assisted large numbers of investors to enter the investment market. We provide an insight into current market conditions, capital growth and returns on investment. As a result we now manage in excess of a quarter of a billion dollars worth of property. Something we at Platinum take very seriously.

Settlement advice: Platinum works in partnership with a number of settlement agencies that we will recommend to our clients. Our settlement agencies offer great service and often advice on legal matters, should they arise.



At Platinum, our aim is to be a total solution company. You can contact us for service at (08) 9300 4100 or info@platinumrealtygroup.com.au

John Kemsley – Managing Director

Platinum Realty Group