OPINION: PEOPLE looking at buying that first investment property often tell me they are concerned it will limit their financial freedom. Nothing could be further from the truth: property investment is a ticket to freedom.
The current market presents ideal conditions for investors, and starting to steadily build up a portfolio gives you a dependable asset and a fantastic, flexible lifestyle.
A careful property investment strategy will, over time, start to provide you with long term rewards and the freedom to focus on a job you love, take time off to travel, or raise a family, all the while knowing you are backed by a bricks-and-mortar asset. Unlike you, your property portfolio is working 24 hours a day, seven days a week to constantly expand your wealth.
Achieving capital growth through property
It took me nine years to gain financial freedom through property investing alone. I did this by focusing on buying well and steadily building up my portfolio. Once you have one appreciating asset you can build up equity which you use to purchase your next property- without having to fund it from your wages.
It is then that the financial benefits allows for change and freedom. For me, this meant I was able to abandon a 9-to-5 job at the age of 31 and focus on my investments. I then turned what I love- property, television and education- into my “day job” as a buyer’s agent and TV host.
Well-chosen properties in key hubs in Australia generally double in value every 7-10 years and produce consistent yields. This represents far better returns for less risk than those achieved by other assets, such as shares, and is why I tell investors property can offer the ultimate ticket to freedom.
Property offers greater freedom than other investment classes
Today, there are generally three ways to achieve real wealth: business, shares or property.
Many people start their own business to escape from a job, but often end up working twice as hard – and only benefit when they sell.
Shares can see massive value rises in a short time period but their value can decline just as quickly.
Property is different: it is solid and easy to understand; it is fully supported by the government and banking system and it is stable. This is why you won’t see property owners panicking like shareholders might when the market takes a turn for the worse. Property can also be self-funded and provides a passive income.
The right investment decision varies depending on the individual, their goals and how comfortable they are with risk. However most people will benefit from including residential property as part (if not all) of their investment strategy. Just remember to have some cash as a backup for unforeseen expenses, and always talk to a property expert who can help you with your investments before you begin.
Building a profitable portfolio
I believe property is the best possible investment- but the key to getting rewards is to buy well. Make sure you take into consideration factors that increase the property’s market desirability- like proximity to work places, public transport and leisure facilities. Be prepared to put in some research and footwork, or pay a professional to do this for you.
My investment strategy focuses on growth rather than rental returns. I believe you will do better by buying better, and when you can afford it. By steadily building a large portfolio you can achieve solid long term gains and cash flow the property to counteract any down times in the shorter term.
If you have twice the assets you should make twice as much money and achieve freedom through property. This is why I advise investors to steadily build a large portfolio, with cash left over for emergencies.
By Chris Gray.* Chris Gray has 18 years’ experience in property investing and education. Chris is CEO of Empire, which searches, negotiates and renovates properties on behalf of time-poor professionals. For more please visit www.yourempire.com.au.
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