{"id":27810,"date":"2022-01-19T18:00:16","date_gmt":"2022-01-19T07:00:16","guid":{"rendered":"http:\/\/propertyupdate.com.au\/?p=27810"},"modified":"2022-08-19T20:26:22","modified_gmt":"2022-08-19T10:26:22","slug":"buy-hold-way-invest-property","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/buy-hold-way-invest-property\/","title":{"rendered":"Buy & Hold is the way to invest in property"},"content":{"rendered":"

In one of his regular Switzer columns<\/a>\u00a0leading estate agent John McGrath gave his thoughts on the increasing number of Australians investing in real estate.<\/strong><\/p>\n

He said:<\/p>\n

Investing in property is an increasing trend and it\u2019s great to see.<\/p><\/blockquote>\n

Fantastic stuff.<\/p>\n

Here\u2019s the flipside<\/span><\/h2>\n

If 1.31 million people own an investment property today, that means only 7.5 per cent of the population aged 20-plus are invested in real estate (Based on ABS Australian Demographic Statistics<\/a><\/em>).<\/p>\n

In a country that loves property, that is extraordinarily low.<\/p>\n

In addition, figures from the Tax Office<\/a> show almost 73 per cent of property investment owners have only one investment property.<\/p>\n

A study by the Australian Housing & Urban Research Institute<\/a> also shows that one in four investors sell within the first year \u2013 nowhere near to see real capital growth; and only 41 per cent retain their investment properties for more than five years.<\/p>\n

This isn\u2019t the way to look at property investment<\/span><\/span><\/h2>\n

While I applaud our 1.31 million investors, the truth is most of them won\u2019t make real money unless they hold for the long term. <\/span><\/p>\n

And if they\u2019re investing for future retirement, they\u2019re more than likely to need more than one asset to maintain their lifestyles.<\/span><\/p>\n

The good news is that with some simple planning \u2013 and your accountant can help you with this, you can safely afford to buy more than one asset and hold these assets for the long term.<\/p>\n

Buy and hold<\/span><\/h2>\n

Buy and hold is the easiest form of real estate investment and history shows it\u2019s a great strategy.<\/p>\n

Buy the asset, never sell it and draw on the equity it creates over the years to buy another property<\/a>.<\/p>\n

The trick is making sure you can cover all the expenses that go along with an investment property.<\/p>\n

\r\n\r\n

<\/div>According to the ATO, two out of three investors are negatively geared and this is probably one of the reasons why so many investors sell too soon and\/or only own one property.<\/p>\n

If you\u2019re struggling with expenses, consider whether you are claiming every tax deduction available to you.<\/p>\n

Do you have a depreciation schedule<\/a>?<\/p>\n

Are you keeping every single receipt for your tax return each year?<\/p>\n

After tax, you might still have a shortfall so you need to make sure your income will cover it.<\/p>\n

A buffer in your cash flow planning is an absolute must. Remember to plan for inevitable changes such as a rise in interest rates; as well as potential changes, such as the loss of your job or starting a family \u2013 both of which would significantly reduce your cash flow.<\/p>\n

Buying more than one<\/span><\/h2>\n

There\u2019s been a lot of discussion lately about the retirement age and the Federal Government\u2019s proposal to increase it to 70 years as of 2035. <\/span><\/p>\n

People are right to be concerned about how they\u2019re going to fund their retirement but instead of worrying about the pension, I think younger Australians and families should be spending more time and energy generating their own wealth to fund their own retirement. <\/span><\/p>\n

\r\n\r\n

<\/div>Wouldn\u2019t you rather a few unencumbered properties delivering you an income every month instead of a pension cheque that\u2019s only ever going to cover your most basic needs?<\/span><\/p>\n

Real estate is one of the safest investment avenues available, so buying more than one is a smart step.<\/p>\n

Two things hold people back \u2013 simple fear; and making a mistake with their first purchase.<\/p>\n

Ideally, the first purchase \u2013 either a home or investment, should be a solid asset that over time will deliver the equity you need to borrow and buy again.<\/p>\n

If you make a mistake and buy a dud, you\u2019ll have to fund the deposit on the next one out of savings and that can be tough in expensive markets.<\/p>\n

The key to being able to hold assets long term and being able to buy more than one is purchasing good quality properties in desirable locations.<\/p>\n

You can equate it to buying a blue chip stock versus a speculative stock.<\/p>\n

The blue chip might be boring, it might grow in small bursts over a long period, but it\u2019s safe and reliable and you can count on a positive outcome long term.<\/p>\n

If you already own an investment property that is negatively geared and you\u2019re concerned about the cash flow shortfall, here\u2019s a solution you might not have thought of.<\/p>\n

Buy again<\/span><\/h2>\n

In any balanced portfolio, you need assets that deliver high growth and assets that deliver high yields.<\/p>\n

With some simple research, you\u2019ll discover that it is entirely possible to buy a cash flow positive property to balance out that negative cash flow asset.<\/p>\n

This is particularly so in regional markets where rental yields are often 7-8 per cent versus the 4-6 per cent you might get in a capital city.<\/p>\n

Finally, don\u2019t let fear hold you back<\/span><\/h2>\n

Think about the capital growth you are missing out on with every month that goes by.<\/p>\n

Believe me \u2013 inaction is likely to cost you more money than anything else!<\/p>\n\r\n\r\n

<\/div>\r\n
<\/div>\n","protected":false},"excerpt":{"rendered":"

In one of his regular Switzer columns\u00a0leading estate agent John McGrath gave his thoughts on the increasing number of Australians investing in real estate. He said: Investing in property is an increasing trend and it\u2019s great to see. Fantastic stuff. Here\u2019s the flipside If 1.31 million people own an investment property today, that means only…<\/p>\n","protected":false},"author":35,"featured_media":16482,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,3],"tags":[106,579],"class_list":["post-27810","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-property-updates","category-property-investment","tag-investing-in-property","tag-john-mcgrath"],"acf":[],"yoast_head":"\nBuy and Hold Strategy in Real Estate<\/title>\n<meta name=\"description\" content=\"Buy and hold is the easiest form of real estate investment. 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