Why Invest In Property? 5 Crucial Factors For Financial Freedom

Property Investing For Wealth Creation

Property Investing For Your Retirement Fund

Property Investing For Your Security

Why property is the I.D.E.A.L investment

You want to invest for your future but don’t know which asset class (shares, property or business) to invest your hard earned dollars into?
This is a question that is posed to us time and again. There are benefits and risks when investing in any asset class however we have personally
found that investing in residential property has given us a great return on our investment with the least amount of risk. You can invest in
property even when you have little or no equity, don’t own your own home and have lots of bad debt.

We call property the I.D.E.A.L investment because it provides:

Income

Depreciation

Equity

Appreciation

Leverage

All of the above are critical factors that the rich use so successfully to build their wealth and which you can also use to build your wealth.

Let us explain further why property has been the I.D.E.A.L investment class.

Income – investing in property has allowed us the opportunity to earn additional income on a regular basis through the collection of rent on the property(s).
We use the rent to help pay off the monthly mortgage payments and/or expenses associated with the investment property(s). This along with other benefits allows
us to live a comfortable lifestyle while continuing on with our successful wealth creation strategies.

Our long term strategy is to pay down the mortgages and then use the rental income as disposable income to live off.

Depreciation – another form of income that property investing provides us is tax deductions in the form of depreciation allowances. The Australian Taxation
Office allows property investors to depreciate the value of their investment properties and claim the amounts as tax deductions against the income. Maximum
depreciation benefits can generally be achieved from new properties however renovated older properties can also provide significant depreciation benefits.
When we started investing in property, our strategy included purchasing brand new properties with high levels of depreciation so that we could utilize the
tax benefits to sustain the investment property while it grew in value. Depreciation schedules can be obtained from registered Quality Surveyors while your
accountant should be consulted for tax deductibility of the items on the schedule.

Equity – is why we invest in property. Equity can be defined as the amount that a property has increased in value over time for example, if you buy a property
for $300k and after some time it grows in value to $400k then the difference ($100k) is simply termed equity. Equity is great because you don’t have to work
hard to get it, it just happens over the course of time, even when you sleep. To accelerate your wealth creation the increased equity can then be taken out
and used as deposit(s) to purchase additional investment properties. This is basically how many of the well known and successful property investors built their
portfolios.

As our properties grow in value, we use the equity to purchase more and more properties. Equity grew quicker as we purchased more properties which in turn
accelerated our capacity to purchase more properties. Each time a property grew in value, we would revalue the property and draw down the available equity to
purchase the next opportunity. Some of our properties have grown by 30% yet had we tried to save this amount of money while working in the “rat race”, we would
never have been able to buy more than one property. Equity has given us the power to buy multiple properties in a very short time frame and grow our net wealth.

Appreciation – property values increase and decrease just like any other investment vehicle however when you look at property over the longer term, it generally
always increases in value and therefore provides low risk investing. We prefer property for this reason and put simply, people need somewhere to live. We have
approximately 120k people migrating into this great country each year and the size of our family units are reducing hence the requirement for more properties for
people to live in is on the increase. When looking to buy an investment property we look for areas that are experiencing population growth or are expected to grow
in the longer term. Population growth helps to ensure that there is demand for property and following the supply and demand principal, appreciation in property
prices is highest in areas of greatest demand. Our genuine wealth has come from our many properties appreciating in value over time.

Leverage – in property investing terms can be defined as the ability to do more with less. Leverage is by far the most powerful feature in property investing and
has got to be one of the many wonders of the world. Without it we would still be trying to buy our first investment property. Leverage has allowed us to maximize
what we have and to create serious wealth. Borrowing more on an investment property than what you paid for it is what leveraging is all about. How great is that.
You can use someone else’s money i.e. the banks to grow your wealth. Banks will lend you up to 80% of the value of the property and in some cases, borrow more at
competitive interest rates. Property allows more borrowing capacity than any other investment class because the banks view it as low risk.

Put more simply you are required to put in less of your own money up front when investing in property than you would if you were investing in any other investment
class. This means that you will be able grow your portfolio much quicker because you will need less of your own money than you would with other asset classes. If
you can at least double the return on what it costs you to own an investment property then you are ahead of the game and on your way to creating serious wealth.
The more that you can borrow at 7.5% interest that is returning 15%, the wealthier you will get.

How many other investment classes provide this many compounding benefits. For us property is the I.D.E.A.L investment class. We don’t know of any other investment
class that provides us with an income while at the same time allowing us to depreciate the assets’ value while at the same time watching the asset appreciate in value.
Appreciation of the asset increases the equity which in turn allows us to gain maximum leverage by borrowing to purchase more property. Repeating the cycle again and
again and again creates wealth at an ever increasing rate, how good is that.

Happy Investing

Paul Tooze

http://www.PropertyBooks.com.au

A leading resource for property investors

The Basics of a Property Insurance Policy

The insuring clause may state that the policy will cover all risk of physical loss or damage (or both) in respect of property identified in the policy, although many policies may simply state that the policy covers loss and damage to the property without identifying types of properly but thereafter excluding certain classes of property. Another phrase common in the London market is “damaged or destroyed”.

The typical property covered will include real property such as a factory or warehouse and will probably include contents such as stock or, in other words, personal property as specified or otherwise excluded.

As mentioned above, policies vary as to whether or not they attempt to define the property cover in the insuring clause or whether they simply refer to “property” and exclude types of property later in the policy. Some policies will refer specifically to “buildings and contents”, whilst others may refer to “real property” which, unless otherwise qualified, would include all things attaching to the land so that they become part of it and therefore would probably include trees and landscaping around the buildings such as shrubberies and pathways. It may also include underground property such as drains, tunnels and pipes. In Hughes v.PotomacIns. Co., 199CalApp2d239 (1962), even the phrase “dwelling building” was held to include damage to the underlying land.

Frequently, however, whether the insuring clause refers to “property” or “real property”, the policy will exclude land, roads, pavements, bridges and also property in the course of construction or erection and material to be used in the course of the construction and erection of the property. On other occasions, the cost of restoring external landscaping may be referred to specifically and a separate limit applied in respect of each and every loss. It is difficult to identify any consistency and each ARPI policy has its own characteristics-particularly in respect to the manner in which it deals with property which is not part of the main building or contents.

Consistently, however, vehicles licensed for road use and other means of transportation, such as water craft, aircraft, caravans and locomotives are excluded from cover.

Also, certain types of personal property which are readily exchanged for cash or perhaps notoriously hard to value are also excluded, such as glass, china, fragile objects, jewellery, precious metals, precious stones, rare books, works of art, bullion, furs, currency, cheques, credit cards, deeds and similar items.

Policies will vary as to whether they cover computer and data processing as standard, as an extension or at all.

ARPI policies may also cover the assured’s interest in property owned by others, particularly where the assured is the custodian of that property.

Businesses Going Green And Seeing Green

When you acquire something, you might be purchasing the entire life cycle of a product or service- the good, the bad, along with the ugly. By stepping up, we give businesses the reason to become sustainable. Did you know that in the US, architectural structures account for over 40% of total energy consumption, 13% of total water consumption, and produce 39% of total carbon dioxide emissions. It really is obvious that a something has to change.

The new shop you see by your home may possibly look the same as everything else. Nevertheless, its tile, wall coverings, and even crown moulding are most likely made from recyclable materials. Inside the bathrooms, sensors control the water, timers manage the lights, as well as the toilets have a low flow option. You might even see LED lighting, priority parking for low emission vehicles, extremely efficient meat and freezer cases, a bin for plastic bags, and environmentally friendly flooring (like bamboo!)!!! In Chicago (and in surrounding suburbs), we are already seeing this in companies including Starbucks, Dominick’s, Whole Foods, Wal-Mart, Subway, and Jason’s Deli.

You will discover a variety of factors that have contributed to this increase in making use of eco-friendly products. Chicago has streamlined the process of getting green permits (for things like a “cool” roof for example). The economy is finally taking off a bit too, so some businesses have a lot more money to spend. Organizations are also realizing that there are great backend savings involved with spending more cash upfront to build and/or remodel with energy efficiency in mind! Green buildings cost much less to operate and maintain. They also have higher asset values than conventional properties. By including items free of toxic chemicals (like bamboo soap), taking advantage of natural light, and using superior ventilation systems, employees will be healthier and far more productive (and use much less sick time!). Green properties also use 25%-30% less water and energy than standard buildings.

Lastly, these adjustments are being demanded by the consumer. The US GRN Building Council even provides LEED building certification, so enterprises can show the customer that they’re making alterations to make their buildings high performance green structures. In the past ten years, LEED has certified more than 13,500 eco-friendly homes and commercial structures with more than 60,000 waiting. With technology catching up with consumer wants and needs, it is becoming more affordable to go green.

And going green is putting money into pockets of workers as well as corporations. According to a study completed by Booz Allen Hamilton and the US Green Building Council, the green construction market will add 8 million jobs and $396 billion in wages to the US economic system over the next four years, so this looks to be a trend which will take hold in places beyond Chicago. One day, eco-friendly will simply be the way that everybody does business.

What corporations in your area are making these changes? Do you frequent them more because they’re green (or trying to be greener)? What adjustments would you like to see done?