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Turn Equity into an Investment Portfolio

Residential property investment is a simple and effective way to increase your wealth and reduce the amount of taxation you pay. The majority of today's property investments follow the same simple formula � you purchase a property and then rent it out to a tenant.

The key element of property investment is that the tenant pays rent. These rental payments assist you with your loan repayments, and the difference between your tenant's rent and your loan repayment becomes a tax eduction. This is known as 'Negative Gearing', and it enables you to minimise your cash outlay.

Mark Evans, Sales and Marketing Manager for Homebuyers Centre, took the time to talk to BuildingWA.com.au about property investment, saying "Equity is a property investor's most powerful strategy on the road towards financial independence."

"In simple terms, equity is the current market value of an asset less the debt that's owed on that asset."

For example, in real estate, equity is essentially the portion of a property that you own outright or the difference between what is property is worth and what you owe against that property.

Put simply, if you have a $400,000 property and you owe the bank $300,000 then you have $100,000 - or 25 per cent - worth of equity.

Mark says "Once you have equity in a property, you can leverage off that equity to borrow more money to build a real estate investment portfolio".

Residential property investment is a simple and effective way to increase your wealth and reduce the amount of tax you pay. Find out how.

There are several benefits of building an investment property as opposed to buying an established home.

You save money in government stamp duty. When building an investment property, you only pay stamp duty on the land price. When you purchase an established home, you have to pay stamp duty on the full purchase amount.
You receive additional tax deductions in the form of depreciation.
There is less maintenance with a new investment property and you're less likely to have any unforeseen out of pocket repairs.

Mark also warns consumers to keep realistic expectations. "Like most investments, real estate is not a get rich quick scheme. Equity gives home buyers the ability to step up the property ladder".

First Choice in First Homes

Homebuyers Centre makes owning your own home easy. Regardless of whether you are renting, living with your parents or just looking for a better home, Homebuyers Centre can help. We'll arrange the best finance and build your dream home in the suburb of your choice.

Call 131 751 or visit www.homebuyers.com.au

Turn Equity into an Investment Portfolio

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