Property Investment - The Way To Go

Written on the 25th of January 2012 by Nathan Cross, Managing Director of Wealthfarm Property Services

It’s little wonder confusion sets in for many once conversations turn to discussing the property market. Further confusion is often fuelled by the barrage of media reports focused on property market investment -  the dos and the don’ts. What should we be listening to exactly? I’d like to provide my insight into the reasons why I think property investment is the way to go.

First up the home I live in does not attract capital gains tax. At this time, I don’t see capital gains tax laws changing in Australia. It is a bonus that the home I live in is exempt from paying capital gains tax - the tax I would need to pay on a capital gain.

I can increase the value of a property investment by renovating it. I can purchase an old run down property, I can give it a coat of paint, lay some new carpet, and polish the floorboards, what a difference a makeover or renovation makes. It will add value to the property and increase the value of my investment. In comparison it’s really difficult to add value to the shares I own.

I like property investment because it is easy to understand compared to understanding a share portfolio, or even a share prospectus or a company’s annual report. Property investment is really simple. I know if I purchase a property for $400K, I can realistically receive $450 a week rent. I know there are expenses I need to calculate and I can use the BMT Calculator to calculate my depreciation claim on the investment. I like the fact it is so simple.

Should my property go down in value, it is highly unlikely my bank will give me a margin call forcing me to sell. This is another reason why I prefer property investment offer investing in the share market. In the past margin calls have forced me to either come up with cash or unwillingly sell stocks at a time I didn’t want to. The problem also lies where many others may also receive margin calls and you find yourself having to sell at a price far lower than what the stock maybe worth or what you think it is worth.

As a property investor I am the master of my own domain. As the CEO of my investment portfolio I can guarantee I am looking out for number one - me! I can be the CFO of my investment property and answerable to a board of directors I care about - my wife and family.

I like investing in the property market because I am not reminded on a daily basis of how much I have lost or made. It’s an easy pattern to get into where you are constantly clicking refresh on Comsec to check if stocks have gone up or down. This is a waste of energy and valuable time. I don’t want to be concerned each day with how my share portfolio is performing.

If you would like any information or assistance on investing in property please feel welcome to contact Wealthfarm on 1800 967 548 or info@wealthfarm.com.au