How to Build a Property Portfolio and become a Millionaire
Most people just dream about becoming wealthy. You can easily make it a reality.
It won't happen overnight, but by carefully building your property portfolio it's almost inevitable utilising a long-term investment strategy.
Help From the Tax Office
The tax office allows you to add up all the costs of buying and maintaining your investment property(ies), including interest payments, and deduct those costs from the rental income.
When the outgoings are greater than the income, your investment is said to be negatively geared. These costs are then deducted from your pre-tax personal income, reducing your marginal tax rate and effectively subsidising the cost of your investment(s).
The more properties you own the more the tax office will reduce your taxable income.
Where to Start
Step one is to purchase your first investment property. Remember, OzInvest carefully selects properties to give you a good rental income and strong medium to long-term capital gain.
A typical example of the strong capital gain our clients have enjoyed are these figures for the Melbourne suburb of Sydenham.
In anyone's book, for an initial $170,000 investment to to be worth over $420,000 in just over 10 years is pretty good going (it's hard to imagine how else you could be that far ahead!).
Over the longer term the picture gets even better, with continuing strong capital gain increasing your equity and personal wealth.
With just one property, you've already gone a long way toward securing your financial future, but that's only the beginning. With the first property secured you're in a position to build your property portfolio and thereby further strengthen your financial position.
Building Your Property Portfolio
You use the equity in your first investment property to invest in a second property, use equity in the second to invest in the third... and so on.
It's called leveraging, making your assets work for you rather than you working for them.
The banks love it. You retain the equity in your property(ies) and the bank uses the equity to secure the loan. It's better than money in the bank, because you're using the banks money to grow your wealth!
With each property you get all the taxation benefits of negative gearing and the accumulated capital gain. From here on it's a snowball effect.
With each property your capital gain grows your equity which grows your wealth. Congratulations, you're on your way to your first million!
The Safe and Easy Way
As the example shows above, a portfolio of 3 properties can put you on the rich list in only 10 years. Whether it's your first property, or you are looking to expand your portfolio, talk to us about the safe and easy way to become a millionaire.
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