What’s so special about investing in property? After all, equities perform better in the longer term so why would you bother at all? Perhaps it’s the ease at which it can be done, or the tangible nature of this asset class. I think it’s more about this marvelous thing called ‘leverage’.
Andrew, founder of Opes Partners, catches up with me recently on our podcast to explore what makes real estate a terrific asset class to participate in. Now property isn’t for everyone and just like Nutella, it’s only part of a well balanced investment plan. Being something that you can touch and feel (and live in!) makes real estate a very natural fit for many, but there are traps that catch young players out: Do you buy for ‘yield’ or do you buy for ‘capital growth’; Buy in a major city or out in an ‘up and coming’ area; Buy pre-existing or buy brand new – go it alone or employ the expertise of someone to coach you through the process?
Leverage, or the act of multiplying market movements (or or down), is what has historical made investing in real estate so lucrative for many already. When the sum total of outputs becomes greater than the inputs, that’s when the magic happens. Lenders, the ones who make this leverage possible, are subject to rules and restrictions around how they can do their thing, and so keeping up to date around the changes and potential loopholes are critical, especially in this current environment. We saw at the start of this year that the LVR restrictions have been altered, making for one of the first positive changes we’ve seen in a long time for investors – there now may be more options when considering your next move thanks to this.
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