What do people want to achieve from a property investment?
There are many reason why people buy property. From speaking to a number professionals in the industry we came up with a list of goals that property investors are typically looking to achieve.
The following list is an example of what property investors seek when investing into property:
- To create a passive income stream that will last a life time
- To assist in building wealth in a tax efficient way outside of their salary
- To assist in providing an income for retirement
- For owner occupier purposes (as a principle residence or holiday home)
- To diversify an investment portfolio
- To provide protection against inflation such as the rising cost of living
- To provide greater leveraging opportunities beyond their existing financial resources
- To leave the rat race and have more discretionary time by not relying on employment income
Some property experts suggest that owning multiple properties is the key to successful wealth creation and to becoming financially independant.
For example if you had $1,000,000 worth of investment property allocated in different cities like Sydney, Melbourne and Brisbane with each producing a 5% rental yield, thats $50,000 of gross rental income per annum. One could argue that this is sufficient to maintain a reasonable lifestyle in Australia versus an aged pension which is only around $21,000 per annum for a single and around $32,000 for a couple. Of course you would also need to take into any holding costs of those properties such as repairs, agents fees, rates, investment property taxes and insurances.
Although the list is by no means exhaustive it provides a good summary of the logic behind the property investment mindset.
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