Food For Thought
If you were to retire at 60 years of age and live to 85 years of age, you will need $1,250,000 in assets/cash excluding your home to live on $50,000 per year.
Statistics recorded since 1901 state that property in Australian Capital cities has doubled in value every 7 to 10 years.
So if you buy a property today for $350,000, and get a loan of $350,000, and don’t pay a cent off it over the next 10 years, then it should be worth around $700,000. You would still owe $350,000 and have $350,000 in equity.
Do that with 4 properties over the next 10 years and you could have well over your required $1,250,000
ITS ALL ABOUT PLANNING FOR YOUR LIFESTYLE!
Is There Ever A Good Time…
The fantastic news for investors is that any slowdown in market sales will create opportunities for buyers who take a long term perspective. The bottom line is that bricks and mortar is an essential commodity – everyone needs a roof over their heads. Quite simply, if you don’t buy a home, you will rent one; thus over time property prices and rents will just keep going up.
The median house price around Australia has gone up over 10% in the last 12 months to May. Again this means you really can’t believe the hype in the media and you have to interpret the figures more carefully!
So, what can we believe? Bank on the fact that in the long term, the value of well-located capital city properties has doubled every 7-10 years.
Experienced property investors know this and buy properties that outperform these market averages by purchasing properties with an element of scarcity. They also love these periods of uncertainty like we are currently experiencing and exploit the lulls in the market to buy the type of property they would have had to fight harder for a few months ago.
It’s hard to beleive that another financial year is over. Where were you financially 12 months ago? What decisions did you make last financial year? Whether you know it or not, you made big decisions. Were they the right decisions?
One of the biggest areas in most people’s lives where they “make a decision to do nothing” is in our finances and investments. Generally this is because we don’t factor in the long term costs into our thinking. Not making a decision then becomes a habit and we delay year after year until we convince ourselves “its too late for me”.
Some people are fearful of making a wrong decision. Why do some people fear making decisions about investing while others take action? Fear almost always comes down to one simple factor, and that is a lack of knowledge. Successful property investors spend time investing in their knowledge. Benjamin Franklin famously said “If a man empties his purse into his head, no one can take it away from him. An investment in knowledge always pays the best interest”.
There are too many people who we hear saying it is “not a good time for me right now”. Now there is no doubt that in some cases, financial and personal that mean it really isn’t a good time for you at the moment. However for every person like that, there are many others who are using that as an excuse to do nothing. If you’ve been saying “its not a good time for me right now” for more than a year, then maybe you should have a look at your circumstances and assess candidly whether it really hasn’t been a good time or whether you are letting that excuse get in the way of you achieving financial independence.
So what decisions will you make in the next financial year? Will you get your finances sorted so that you invest in a property?
Whatever you do, remember in the next financial year ahead, you are making a decision. Whether it is to do something or to do nothing, it is entirely up to you.
Tip Of The Month: Purchasing A Unit
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Proximity – Your unit should be close to good public transport, education and shopping facilities. Also look for a unit close to entertainment, dining and sporting facilities.
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Location – Look to purchase in a suburb with strong capital growth above 8% pa.
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Owner-occupied stock – Look for blocks of units that have more than 70% owner occupiers. If it does not, strong competition from other investor stock will reduce rental yields.
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Street Appeal - Find a quiet street with attractive surrounding homes and landscape.
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Layout – Look for a unit with modern bathrooms and kitchen and the more bedrooms the better!
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Aspect/Light – Look for a proeprty with good natural light and a north facing aspect.
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Storage & Parking – Ensure the unit has storage space and a garage.
