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The Benefits Of Long-Term Property Investment

The Benefits Of Long-Term Property Investment

The latest interest rate cut in May put the variable rate at its lowest level since the Second World War, and with banks more willing than ever to lend people money and a growing number of dual-income households, the great Australian love affair with property looks set to continue.

According to ABC Fact Check*, 67 per cent of households own their home or are paying off a mortgage and although properties are getting pricier, they are also getting bigger. In fact, at 245m2, the average new home in Australia is the biggest in the world - so it could be said that size does count when it comes to property investment as an attractive proposition.

Buying property can be an excellent way for people to protect themselves against the impact of inflation, build capital and set themselves up for retirement. However, as every smart investor knows, short-term gains from property investments are rare and the best way to view any relationship with property is as a long-term wealth creation strategy. Many experts agree that property should be held for a minimum of seven years (but may take up to 12 to 14 years) in order to reap the financial benefits of the cyclical market.

As a long-term investment, it's hard to beat property and here's why.

Benefit 1: Lower risk - reduced stress
An investor looking to make a quick profit is likely to experience greater levels of stress and anxiety levels because they're probably taking greater risks. A long-term investment such as property is generally lower risk, giving investors peace-of-mind that they can enjoy rental income, tax incentives and capital growth over an extended period of time.

Benefit 2: Ride the rough times
A long-term investment in property enables people to ride the downturns and corrections in the market and achieve higher value gains over time. Obviously, it is crucial to choose the right property in the right location, but property has proven its worth to investors who are prepared to hang in for the long haul.

Benefit 3: Leverage investment
Property ownership can be a way of enabling investors to borrow against the security of tenure, or take advantage of opportunities to refinance the property or capitalise on the equity in the property. Leveraging their property investment can be especially beneficial during times when interest rates are particularly low.

Benefit 4: Increased rent returns
As rents increase over time, the investor will benefit from an improved cash flow and higher income.

Benefit 5: Above market capital growth
A long-term 'buy and hold' strategy can result in higher than average capital growth. History has shown that well-positioned properties will increase in value over the long-term and that long-term property investment has been a good way of mitigating economic and political uncertainties and delivering solid returns.

However, as with any investment decision, it is important to make informed choices that suit your individual circumstances and needs. Getting the right investment advice is crucial and if you are considering buying property or if you need a property manager for your rental, you should contact Time Conti Sheffield. They have been leaders in real estate and property management in Perth for over 60 years and have an unparalleled reputation for integrity, professionalism, performance excellence and quality service and you can find them on 08 9362 5333 or via their website, www.timeconti.com.au.

* www.abc.net.au/news/2015-05-06/fact-file-housing-in-australia/6442650

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