Key reasons why you should build for investment
People will always need a roof over their head, so the property market is a simple means by which the average person can create wealth. This is why
Fairmont are so passionate about property investment.
Here are 4 reasons why you should not only invest in property but 'build for investment'.
1. Simplicity, stability and predictability
Property is a simple concept. The language is easily understood and there are limited options to understand. The market is also predictable and relatively stable; making the process of assessing, quantifying risk and planning much easier.
2. Meet market trends
One of the huge benefits of building is being able to specifically target the market. The astute investor researches the types of property in demand in each area, realising features, materials and expectations of buyers all vary. To maximise your capital growth, homes need to be on trend and reflect lifestyle opportunities expected by the end purchaser.
3. Creating wealth
Building offers an exceptional opportunity. If you do your research and follow the processes the worry and risk pale in comparison to the opportunities. There are so many ways to add value and create equity in your property. Many investors then borrow against that equity to purchase additional properties. In effect, using tenants to help pay off their loans and using other people's money to leverage funds allowing them to purchase more properties.
4. Financial benefits
When building for investment we have the opportunity to make money from the land by subdividing, but we also create equity through capital growth and adding value; many also generate a passive income from rent.
Advantages unique to building also include:
- Government subsidies/incentives, such as the First Home Owners Grant.
- Stamp duty concessions as you pay stamp duty only on the land, not the entire value of the property.
- Depreciation offers significant tax relief as much can be claimed over the first few years.
- Tax benefits allow you to claim on any expense incurred against your investment property.
- Smaller deposits are usually required by banks making purchase more attainable.
- Energy efficiency, as we use passive design to reduce energy bills.
- Lower maintenance costs as, unlike established homes where you inherit problems, everything is new and includes the latest technology. You also have peace of mind knowing that if issues do arise you will have some protection under warranty and if you build with Fairmont Homes you receive our 50-year structural guarantee.
- Capital Growth: the increase in the value of your property over time.
- Equity: the difference between the market value of your property and the amount you owe on it.
- Passive Income: a regular stream of income earned with little effort.
- Depreciation: a decrease in the value of an asset over time, e.g. from wear and tear.