Property Investment, Wealth Creation, Real Estate, Tax Savings, Custodian WealthBuilders, Australia |
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Learn how to use property to make $1 million - from scratch - in one year.
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Marion Biemond
Last year, we sat down and made a goal of acquiring 12 properties - and that seemed to be a huge amount that maybe we could never achieve... But since becoming Custodian clients, we've purchased three houses in the past year... |
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Learn About Property Investment
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Why Invest in Property?
A lot of people will try to tell you that shares are a better investment than property. It's true that some shares show a higher income return. They are easily tradeable, and shares in the major companies have the advantage of high liquidity: they're practically cash.
The key is leverage.
Let's assume that in the first year, the value of Bill's property increases by 9.8% - and Ted's shares go up by 12.6%. Which is the better investment?
| BILL'S PROPERTY |
TED'S SHARES |
| Deposit $40,000 |
Deposit $40,000 |
Banks will loan 90%
$360,000 |
Banks will loan 60%
$60,000 |
| $400,000 @ 9.8% Capital Growth |
$100,000 @ 12.6% Capital Growth |
| Return $39,200 |
Return $12,600 |
Bill gets over three times better a return in property. Bill's equity has gone up from $40,000 to $79,200 ($439,200 - $360,000). That's a return of just under 100%. Ted's equity has gone up from $40,000 to $52,600 ($112,600 - $60,000): a 32% return.
So even if the shares have twice the 'growth' factor, the property offers more than twice the growth in true capital worth (equity) - simply because of its leveraging ability
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