Everyone wants to live life on his own terms and get things done when needed; however, it requires financial stability with a decent passive income. Who doesn’t want to live with a commitment to comfort, convenience, and wellness extending every facet of daily living? If the income doesn’t align with your expectations and growth plans, it creates mental distress. Are you among thousands of Australians looking for a lucrative but risk-free financial venture to secure your future and lead a luxurious lifestyle? if yes, real estate investment might be the perfect solution to increase your income in 2025 and after.
11 Benefits of Strategic Property Investment: Why Real Estate Investment Is the Best Way to Improve Lifestyle
A rewarding, secure, and returns-generating investment is the key to transforming your lifestyle from lots of financial worries and constraints to a lifestyle with adequate funds, financial stability, and freedom to explore growth opportunities. The top eleven lifestyle benefits of investing in property, you would certainly like to enjoy, are-
- Stability: Real estate investment in Australia has been a top choice for investors looking for additional financial growth. Property investment provides a dependable foundation for steady financial growth.
- Early Retirement: Don’t work to survive even if age and physical condition don’t allow. Real estate investment allows you think about early retirement and enjoy a healthy lifestyle with peace of mind. Rental income and increasing market value of property keep your financial worries aside.
- Tax Benefits: You are entitled to deduct property taxes paid for real estate investment from your taxable income. Property depreciation deduction reduces your taxable income. When you sell your investment property, you may get a capital gains tax rate. If you hold the property for more than 12 months, you become eligible for a 50% discount on the CGT; it reduces taxable income.
- Net Worth Increase: “Ninety percent of all millionaires become so because of owning real estate because it is safe and tangible as opposed to other forms of investment.”- Andrew Carnegie. The increasing overall net worth provides peace of mind, financial security, and the ability to achieve financial goals.
- Freedom From Traditional Work Schedule: A well-planned real estate investment frees you from the traditional work schedule of an organization; you have more time to live your passions.
- Inflation-safe Investment: The guaranteed return with low risk makes real estate investment an ideal choice for any budget investor. The economic fluctuation doesn’t affect financial growth.
- High Flexibility to Control: A secured real estate investment generating regular income allows you to make critical decisions without financial worries. You have many options to use your property as per your liking, earning plans, and life conditions.
- Reduced Volatility: Other investment options like shares and bonds involve high risk; and, if you’re not careful, you may face financial loss also. On the other side, the capital value of your real estate portfolio is safe and gives a return better than the savings account.
- Portfolio Diversification: Property investment provides diversification in your investment portfolio because property values are not correlated with other asset classes. It helps you cover losses you may have from other investments.
- High Rental Demand: The growing population and shortage of residential properties in all the major cities contribute to the growth rate of your rental property investment.
- Earning From the Loan Amount: Investors tend to buy a property with a minimum deposit; therefore, they build their real estate assets from outsourced funds and earn much more than they pay as interest.
➤Statistical Overview of Rental Income in Australia in 2024 That May Help Investors Improve Lifestyle in 2025
The median property rent in Australian capital cities is $650 per week. If you’re planning to invest in a rental property to have some passive income, go with a strategic approach because rents across Australia are rising at a rapid pace. The advertised rental prices for residential properties in Australian capital cities surged 11.1% over the last year to June 2024. Almost 49% of Australian renters spent about 30% of their income on rent in 2024; it shows the earning potential of investing in a residential property.
“The growing generational wealth inequality is linked to the increase in asset prices that is being enjoyed by older households leaving younger cohorts behind”- AMP. Australians aged 55 and over are increasing their spending to better their lifestyle despite the cost-of-living crisis. The debt-free property owners are getting maximum financial benefits from the current economic cycle in Australia. Higher demand for rental properties in all the major cities enables you to charge higher rents to cover your expenses and save more. Rental income increases in line with inflation; therefore, property investors lead a lifestyle of choice unaffected by inflation.
➤Understanding Key Factors for Hassle-Free Property Investment Financing to Live a Stress-Free Life
Securing appropriate financing for property investment is a critical aspect of rental income generation. Understanding the various interest rates, government incentives, and mortgage options can significantly improve the net gains of your investment. Here’s a comprehensive overview of key factors that may help you make informed decisions for rental property investment-
- Mortgage Options: The two popular types of mortgages in Australia are-
❖Principal and Interest (P&I) Mortgage
❖Interest-Only Mortgage
- Interest Rates and Terms: Interest rates and terms directly impact the borrowing cost and the profitability of your investment. There are two main types of interest rates-
❖ Fixed Interest Rate
❖ Variable Interest Rate
- Government Grants & Incentives: Australian states offer a range of government grants and incentives to encourage and financially support property investors. Some incentives are stamp duty concessions, tax rebates, and first-home-owner grants. An experienced mortgage broker with expertise in financing property buyers may guide you to leverage the benefits of government grants and incentives.
- Loan-to-Value Ratio (LVR): The LVR is calculated by dividing the offered loan amount by the property’s purchase price. If you keep the LVR below 80%, you get an LMI exemption. For example, you need to borrow $400 000 and the property price is $700 000. The LVR of the home loan would be -($500 000 loan ÷ $700 000 property value) x 100 = 71.4% LVR.
- Mortgage Insurance: LMI protects the lender in case of default; however, it doesn’t benefit the borrower. It is applicable
- Pre-Approval: It is a critical process in borrowing for a property investment. The pre-approval tells sellers about your credibility to buy the particular property; it supports you in facilitating negotiations.
- Loan Features: Different mortgage brokers offer loans to buy property at different terms and conditions. The suitability for stress-free repayment depends on the flexibility and functionality of the mortgage contract. Some features you should essentially focus on are redrawing facilities, freedom to repay more than due without penalty, offset accounts, etc.
To conclude, navigating the complex landscape of financing for real estate investment can be overwhelming for you as an investor. Seeking professional advice from a qualified mortgage broker like ASK Financials can help you assess your financial situation and the most suitable loan option. Experienced mortgage broker has in-depth knowledge of local norms that help you plan better, save more, and invest in the best return-ensuring property.
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