Today, we’re discussing the benefits of gearing when investing in real estate. While there are many ways to invest in assets, property investing has some unique advantages, and gearing is one of the biggest.
One of the major advantages of gearing in property investing is that you can use other lenders, such as banks, to fund your asset purchase. With standard residential real estate, you can borrow up to 90% of the property’s value, which means you only need a 10% deposit plus purchase costs.
The benefit of gearing is that when the property grows in value, you gain the capital growth of the entire asset, not just the value of the deposit or funds you personally put in. This allows you to build your net worth much faster because you can use the equity gain to fund other asset purchases.
In addition to capital growth, rental income is another advantage of investing in property. Furthermore, the tax benefits for property investors are very generous. However, the specific figures will vary depending on the property and the details of the investment.
For example, let’s say you invest $100,000 in an asset that returns a 10% profit. You would earn a $10,000 profit. However, if you invest the same $100,000 in a $600,000 property that grows in value by 10%, you will earn a $60,000 profit. Although there are costs and taxes involved, the base sums make property investment an attractive option.
We hope these top tips have been helpful for you. If you’re interested in learning more about property investment or how to take advantage of gearing, feel free to book a strategy call with us by click here.
Regards,
Geoff Tomkins
Buyers Advocate
PH: 0404 852 781
