I’m pretty much a stereotypical Italian. Growing up with my mum, my dad Giuseppe and my two sisters, meant I was just as exposed to property as I was to pizza and pasta. The idea is, you start saving from birth to buy your first property. Often, I found myself not knowing what I was saving for and just hoping that I’d be told where to buy a home when the time came.
Now, this strategy has served my grandfather well. However, a few of his key principles don’t align with the principles that I now know can help maximise the success of property investing.
- Investing where the opportunities are
- The performance of houses vs apartments
- Off the plan property
- Interest only loans
Thankfully, my grandfather’s principles have put me in a great position but my next step will be driven by research. I’ve found that his mentality is in line with many of my friends who haven’t been exposed to the education and opportunities that I have.
Investing where the opportunities are
Investing in the right property, in the right market at the right time is critical. This is also the reason why investing in the suburb you grew up in may not represent the best opportunity. That’s where the Blue Wealth research team comes in, we are proactively assessing the Australian property market to identify the best assets.
The performance of houses vs apartments
‘Land appreciates and strata titled property doesn’t.’ Property growth is driven by demand and demand for accommodation types is changing. Over the last decade, capital city housing growth has marginally outpaced apartment growth with the former increasing by 72% and the latter by 66%. When you take into account the higher rental yield and maintenance cost of apartments, long term performance of both assets are largely in line.
Off the plan property
This can be daunting although the process is much simpler than people think. The advantages of investing off the plan are:
- Choice: you are not limited to what is available in the resale market. Blue Wealth approves the best apartments within a project to maximise your exit strategy
- Long term approach: buying new property ensures you minimise the costs of maintenance
- Tax benefits: with new property, you can claim a higher amount of depreciation and property costs to lower your taxable income
Interest only loans
Interest payments on an income bearing asset are tax deductable whereas principle repayments are not. You can also use the money you would have put toward principle to diversify into other assets. Your role as an investor is to maximise the size of your asset base.
What I have learnt is that there is nothing more valuable than an investment in education and knowledge. The principles instilled in you by family are not always the best principles to adopt to achieve your goals. It is important to keep an open-minded approach and be guided by education rather than tradition. I’ll leave you with a quote by Benjamin Franklin, ‘an investment in knowledge pays the best interest.’