Investment in property is seen as one of the best ways to earn money from your existing capital, with stable yields year on year. But why is it that property is such a worth investment, and is not investing in property tying you down and your money up in bricks and mortar? In this article we will look at exactly why property is considered to be a wise investment, and the factors to consider when investing your money.
Investing in property can be a very beneficial endeavor. Working around basic accounting principles, the property you acquire is a capital asset, so hopefully increasing your overall net worth. This does not seem the case when you consider the amount of money you can plow into property with no immediate return. However, property usually appreciates in value, rather than depreciating, year on year, which slowly increases the value of your total assets for when you ever sell. Furthermore, this overall gain does not fall within the parameters of income for tax purposes, and so can escape this burden to a large amount in your annual tax returns.
Investing in property also has the added bonus of allowing you to grant charges and standard securities against borrowing, over a property that is not your home. That means you can raise finance from your property without risking your home, so even if you default on the loan repayments, you'll still have a roof over your head. Furthermore, if you negotiate a lease with a tenant for your property, you can expect a return of 8% of the value of the property each year in rental income, which would certainly be sufficient to pay off any mortgage and leave some nice profits to play with. Just remember to let the taxman know, because he has a claim on that as extra income.
A potential way to secure property investment is to act through an incorporated company, to raise finance from investors and institutional lenders alike. Of course, this has the great advantage of limited personal liability, although you may still find yourself granting personal securities over money you borrow. Whether or not you choose this vehicle, it is certainly one of the most popular for large scale property investments the world over.
Investing in property is not a guaranteed return on investment, but you're almost as good as it gets. Property has the potential for high incomes and big profits, but with all this big money floating around, remember the scale of risk involved.