Inflation

Each year and every year the Federal Reserve system increases the money supply. As more money chases after a slowly increasing supply of properties, property prices go up - even without an overall favorable change in the underlying forces of supply and demand (market appreci-ation). The Federal Reserve specifically designs its monetary policies to create a modest (1.5 to 3.0 percent) annual gain in the Consumer Price Index (CPI). Sometimes,...

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Appreciation in Market Values

Over periods of 5 to 10 years, nearly all types of properties gain in value because population, jobs, incomes, and wealth (buying power) grow faster than the amount of new construction. Over the long term, more people with more money consistently push real estate prices up. "Okay" you retort, "but that was then and this is now. Surely prices can't continue to increase as they have in the past?" I answer, "They can and they will." To see the...

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Multiple Paths to Building Wealth

Now you're going to see why real estate investing offers you greater opportunities to build wealth than any other type of investment. With real estate, you can make money in dozens of different ways. For starters, here are 16 potential paths to profit: Read the next articles Appreciation in market values Condominium conversions Inflation Improved management Cash flows More-profitable market strategy Mortgage payoff Tax shelter Buy below market Discounted...

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Spend Less, Save More

When Jack Holden was asked how his family got started investing in real estate, here's how he responded. We scraped, borrowed, and leveraged from every resource we had to muster the funds we needed.. . . For seed money we cashed in saving bonds and borrowed from our insurance policies. The entire family went on an austerity plan to cut back our food, travel, and entertainment expenses. Today we're thankful we made those early sacrifices. Thankful,...

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The Deductions of an Investor

As an investor, there are three categories of expenses which you have the luxury of deducting from your tax: 1. Acquisition and Maintenance Costs You can offset expenses relating to your investment property against rental income; whether it was negatively geared or not. Some expenses which can be claimed are: Advertising costs to fnd tenants Bank fees and charges on your loan accounts Borrowing expenses Body corporate fees Cleaning...

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Tax for Property Investors

Property investment allows buyers to have the luxury of certain tax benefts; however as an investor you will also incur additional taxes. The following provides a breakdown of taxes related to property investment. Tax Incurred by an Investor There are several taxes that you will incur when acquiring and owning an investment property: Income Tax You will be required to pay tax on income (rent and any other money) which you receive from...

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What Makes a Good Investment Property?

A well chosen property is likely to deliver greater return in the future; not only in the form of capital growth but also in the form of rental returns. In order to maximise investment return, here are some key considerations to make:  The Right Stage of the Property Cycle The property market moves in cycles. Property values may rise due to strong market growth, remain steady or even decline during certain phases of the cycle. Thus, as an...

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Cost of Investing

An investment property has many benefts and if chosen carefully can provide solid fnancial returns. However, it can also be an expensive asset to acquire and maintain. There are many upfront and ongoing costs which need to be taken into account when taking the plunge. Initial Costs The following are costs which you will incur when the purchase is frst made. Expense Frequency AMOUNT Annual amount Deposit Once off payment...

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