06 Jan VIDEO – Is it good to invest in property?
Unlike shares, real estate offers you more guarantee that you won’t lose money. Buy shares in a company and you can’t guarantee that the company you invested in will even be around in 1, 3, 5, 10 or 25 years. Your property is not going anywhere and even if the property burns to the ground, the insurance company will build you a new one. If your stocks go down in flames, too bad, you lose it all. Unlike other investments classes, property offers you with many options in terms of growing the value and income on your property. You can also control where you buy, how you buy and when to sell. While it’s true that economic conditions play a role in driving property values, its role is much more magnified in the share markets where emotions and news can have a strong influence on values. Real estate is less volatile than stocks or mutual funds, especially in uncertain economic times. Even if there are some “corrections” in some Australian markets as we’ve seen recently, the continuing demand for housing fuelled by strong population growth ensures property prices are supported. It’s also worth noting that the price drops most people fear are NOT real losses until you sell the property. If the property was purchased correctly and generates a healthy cash flow, the investment can be sustained until the price gets back up again. Unlike the share markets where there are complicated terminologies you need to get your head around, real estate is relatively simple. You know what a house, unit or a townhouse is and you don’t need a 60-page prospectus to tell you all about it. Another great advantage to property investing is that your tenants are paying down your mortgage while you sit and watch your investment grow in value. Property with strong cash flow can ride uncertain times such as during a recession for simple reason that it meets a basic need- housing. Real estate makes more millionaires than any other asset classes. Count all the people you know of who have become millionaires by investing in the stock market, bonds, commodities, art or mutual funds. Now, count all the people you know of who have become millionaires with real estate. Fortune Magazine found that 97% of all wealth was either created or held in property. Now which one would you bet on?