How to Invest in Property Long Term
12 February 2019
When it comes to buying property, there are so many different ideas and opinions. Some say you should buy as your own home, as an investment, buy new property, buy/reno/flip, the list goes on. Everyone swears by their strategy, telling you it’s the best possible option for you.
Unfortunately it isn’t that easy. There’s no one path that will drive success with property, because the right strategy depends on you. Where you’re at right now, what’s important to you, and how your situation is going to change over time.
But there is one way to invest in property that involves less risk than some of the others. And this strategy is one that can make you a bunch of money over time. But before I share it with you, I want to give you an example on how property prices can grow over time.
From the September 2018 Domain house price report, the current median house price in Sydney is $1,101,532. And the Core Logic 25 year housing trend report shows that the long term growth rates was 6.8% for houses and 5.9% for apartments.
The table below shows how property value would grow over the next 30 years based on the median house price and long term growth rate
|Today||10 years||20 years||30 years|
You can see from the table above that we’re talking about some big numbers. And these all come from buying a good property and holding it for the long term.
Sure, there are some other strategies that have no doubt generated good returns for others over time. But, if you can get these sort of returns from simply buying and holding a property for the long term, why do you need to push harder?
And almost all other property purchase strategies involve more risk than buying a holding property. As soon as you start buying and then selling properties, you involve ‘timing risk’ into your investments. Timing risk is where you buy or sell at the wrong point in the property market cycle, and you can lose money (or not make as much) as a result. And above timing risk, you have to cover the cost of buying and selling property.
“Settle” is one of my least favourite words in the dictionary. But in this case, settling for good returns over time can be a smart play.
You can see from the numbers above that buying property and holding it for the long term can be a super effective way to grow your assets and wealth over time.
The key is getting started.
But with property prices where they are you need to put in some solid work to make it happen. And today it’s more important than ever that you’re smart about your property strategy and how you get into the market.
It takes some work to get there, but you can see the payoff is worth it. I promise you’ll thank me later.
Ben Nash is a financial adviser and founder of Pivot Wealth, and the Author of the Amazon Best Selling Money Guide, Get Unstuck.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.