Property Investor – Stoprent Properties

How to build wealth through property investing – without sacrificing your lifestyle ?

Did you know that 70% of all self-made millionaires in Australia created their wealth through property investing ? Why Property Investing in Australia

Why do Australian residential properties outperform practically every other property market in the world? Even during the Global Financial Crisis when the world’s property markets collapsed and lost up to 80% of their value in some cases, the Australian property market stood firm and experienced one of the highest gains ever post GFC

One answer we can attribute to our stable social and financial history, foreign investors like investing in Australia, the other is due to our strong immigration policy, with over 200,000 new immigrants coming to our shores every year that in turn creates a huge demand for residential properties. The strong demand is pushing the prices up, naturally, if you are a property owner you welcome this phenomenon because it is making you richer, the more properties you own the richer you get.

So the news is good for all of us wanting to create wealth from the property investments

Our nation will continue with the strong immigration policy because it has to, spurring on the growth in property markets.

If we analyze the residential property to determine what actually makes the property grow in value, the clear answer would be the land component, simply because the house/dwelling actually deteriorate over the years and depreciates in value.

Therefore a home bought 80 years ago would only be worth the land component today, unless it is substantially refurbished hence that gives us clear understanding that it is the land and only the land that appreciates in value.

So why do property investors buy homes rather than just land?

The reason being is that in a residential property investing we need a two-fold strategy, yes only the land does appreciate in value but we need to create a mechanism for servicing the cost of holding it, vacant residential land will not entice anyone to rent it from us because they have no need for it, for this reason, we build a house on it, now people will want to rent it from us and pay us a substantial amount so we can then cover our servicing costs of holding the property.

This is the reason that I strongly advocate investing in detached residential properties only where there is a substantial land component, the more land the better. Just imagine if you owned one flat/apartment in an ageing block of 20 flats, your portion of land ownership would only be 5%

If that block of flats had to be demolished and rebuilt

You as a one flat property owner would find yourself in a bit of a pickle because if you had bought this flat for say 350k which would mean that the rest of the flats had a similar value, that would place the entire complex value at 7 million, the land value alone would not be anywhere near the 7 million,

So this is what you need to consider when evaluating property investments, I once observed a comparison in property values, a modest home bought in Melbourne inner city suburb of Malvern in 1971 for then $ 18,000 by 2010 this property was valued and sold for 2.3 million,

In fact, if the vendor had demolished the existing home, it would have fetched a few thousand more because it would have saved the purchaser the cost of demolishing.

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