Gearing is borrow money to invest.
Gearing may be used to accelerate the process of wealth creation by allowing an investor to make a larger investment than would otherwise be possible. The borrowed money can be invested in many ways, including shares, property and managed investments.
Gearing can help build wealth faster. It can be tax-effective and you can repay the loan by using income from your investments. The downside, of course, is that it can enhance your losses if your investments fall in value.
For gearing to be successful in the long term, your investments need to generate a total return (income and capital growth) that exceeds the after-tax costs of financing your investment (including interest on the loan).
Gearing is considered to be an effective long term strategy because experience has shown that over the long term, growth based investments can deliver the higher potential returns required. However, investments suitable for gearing are generally more volatile than others, and can also lose value.
Therefore, you need to be able to retain the investment during protenial short-term market declines, in order to obtain the benefits of long term growth.
Benefits of gearing
Some benefits of gearing include:
1. Potential for increased capital gains and diversification.
Gearing increases the size of investor's portfolio by allow them to purchase additional investments with borrowed funds.
2. Taxation.
There are some additional tax benefits associated with gearing, under current legislation, interest payments on money borrowed to invest, together with ongoing expenses, can be claimed as deductions against your taxable income.
Tuesday, June 28, 2011
Saturday, June 25, 2011
Residential Real Estate Investing
The most popular form of investment in real estate in Australians is residential real estate investing like: flats, townhouses and houses. It's one of several property investment to start with. Others include offices, commercial and retail real estate for experienced investors.
If you are entering real estate investment the first time, you must make sure that you understand the details of the new market and obtain expert advice if necessary. Do research and know in advance the following costs that associate with your investment.
Initial costs:
Loan
Stamp duty
Legal and conveyance fees
On-going costs:
Interest costs on borrowing
Insurance
Rates
Repairs
Body corporate (in most unit or apartment complexes)
Beside there are some issues you need to consider such as taxation, legislation to protecting your wealth and assets. When doing a real estate investing research it is important that you understand how these issues will impact on you and what you should expect.
As long as the net gains from your residential real estate investing over the long term outweigh the cost of borrowing and the value of your investment poperty increase very year then you are on the right track.
If you are entering real estate investment the first time, you must make sure that you understand the details of the new market and obtain expert advice if necessary. Do research and know in advance the following costs that associate with your investment.
Initial costs:
Loan
Stamp duty
Legal and conveyance fees
On-going costs:
Interest costs on borrowing
Insurance
Rates
Repairs
Body corporate (in most unit or apartment complexes)
Beside there are some issues you need to consider such as taxation, legislation to protecting your wealth and assets. When doing a real estate investing research it is important that you understand how these issues will impact on you and what you should expect.
As long as the net gains from your residential real estate investing over the long term outweigh the cost of borrowing and the value of your investment poperty increase very year then you are on the right track.
Wednesday, June 15, 2011
How To Find Cheap Real Estate
Everyone likes to buy cheap real estate. Whether it is everyday goods, such as food and clothing, or more expensive items, such as cars and real estate, there are ways to buy cheap. But it is not so easy when looking to buy cheap at real estate, but the rewards can be tremendous when you do find one.
Here are some tips to consider when looking for cheap real estate:
1. Keep your eye on properties for sale
2. Search the public trustee, deceased estates and mortgagee sale websites
3. Recognize any renovation potential
4. Keep an eye on the properties for sale in your area. You need to keep an eye on the properties for sale in your area and, in particular, the time they spend on the market. The longer a property has been for sale, the more chance you can buy cheap.
However, this is not always true. A property that has been on the market for a long time but whose asking price has not changed is unlikely to be reduced. This indicates that the vendor is not hurry to sell. On the other hand, if you see that the asking price has continually dropped over a period of time, this is a sign that the vendor is flexible and could be willing to sell cheaper than the market value.
Do a research at the public trustee, deceased estates and mortgagee sale websites. Normally, when people are forced to sell, due to a death or mortgagee sale, the property can often sell for less than it would under normal circumstances.
Cheap real estate is often bought because other people don’t see the potential of the property. Most people will walk through an old house and only see the peeling wallpaper, ugly carpet and an old fashioned kitchen. Renovators will see an opportunity to paint the walls, rip up the carpets, polish the floorboards, expose the authentic fireplaces and put in a modern kitchen.
Very often people will drive by a property and see a run-down house on a large block of land. Those who are familiar with property development and know the rules and regulations of the local council will see a golden opportunity. To the novice it may seem impossible at first to build the units, but it is just a matter of confidence. Knowledge will build your confidence. You only need to know more than the rest to be able to buy cheap.
Here are some tips to consider when looking for cheap real estate:
1. Keep your eye on properties for sale
2. Search the public trustee, deceased estates and mortgagee sale websites
3. Recognize any renovation potential
4. Keep an eye on the properties for sale in your area. You need to keep an eye on the properties for sale in your area and, in particular, the time they spend on the market. The longer a property has been for sale, the more chance you can buy cheap.
However, this is not always true. A property that has been on the market for a long time but whose asking price has not changed is unlikely to be reduced. This indicates that the vendor is not hurry to sell. On the other hand, if you see that the asking price has continually dropped over a period of time, this is a sign that the vendor is flexible and could be willing to sell cheaper than the market value.
Do a research at the public trustee, deceased estates and mortgagee sale websites. Normally, when people are forced to sell, due to a death or mortgagee sale, the property can often sell for less than it would under normal circumstances.
Cheap real estate is often bought because other people don’t see the potential of the property. Most people will walk through an old house and only see the peeling wallpaper, ugly carpet and an old fashioned kitchen. Renovators will see an opportunity to paint the walls, rip up the carpets, polish the floorboards, expose the authentic fireplaces and put in a modern kitchen.
Very often people will drive by a property and see a run-down house on a large block of land. Those who are familiar with property development and know the rules and regulations of the local council will see a golden opportunity. To the novice it may seem impossible at first to build the units, but it is just a matter of confidence. Knowledge will build your confidence. You only need to know more than the rest to be able to buy cheap.
Real Estate Investing
About Real Estate Investing!
Before investing in real estate it’s wise to do a research and learn more about the pro and con of real estate investment. Of course I don’t mean going to school or high education but rather study around what things constitute the best real estate investments.
The most common real estate investing are residential and commercial real estate investment. Both kind of investments require skills and knowledge, but as time go by you will learn more and your knowledge will be widened.
Commercial real estate investment presents a multitude of ways to engage in creative real estate investing. Residential also offers many opportunities to whom who has taken the time to learn real estate investing from the ground up.
It's a good idea to study every guide to real estate investing that you can find via the net, attend the seminars, buy real estate investing books and enroll in real estate investing courses.
Most real estate investing guide will cover information for beginners. Take your time to study the guide and make sure you read the newspaper regarding real estate investing news. By doing all of these things you’ll help yourself understand deeply about the subject. When you investing in real estate you can get a mortgage like no deposit home loans that have available to home buyers.
Before investing in real estate it’s wise to do a research and learn more about the pro and con of real estate investment. Of course I don’t mean going to school or high education but rather study around what things constitute the best real estate investments.
The most common real estate investing are residential and commercial real estate investment. Both kind of investments require skills and knowledge, but as time go by you will learn more and your knowledge will be widened.
Commercial real estate investment presents a multitude of ways to engage in creative real estate investing. Residential also offers many opportunities to whom who has taken the time to learn real estate investing from the ground up.
It's a good idea to study every guide to real estate investing that you can find via the net, attend the seminars, buy real estate investing books and enroll in real estate investing courses.
Most real estate investing guide will cover information for beginners. Take your time to study the guide and make sure you read the newspaper regarding real estate investing news. By doing all of these things you’ll help yourself understand deeply about the subject. When you investing in real estate you can get a mortgage like no deposit home loans that have available to home buyers.
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