Posted to Sydney Morning Herald (31/10/2011) on 1/1/2011 at 9:42 PM (Not yet published)
Commenting on “Home prices continue downward trend”
http://smh.domain.com.au/real-estate-news/home-prices-continue-downward-trend-20111031-1mr9p.html
When you buy an investment property, you pay say 20% and borrow the rest. If the property is worth $250000, the total rental receipts breakeven after 7 years, and the property has increased by 10% in value, that is $125000, what is the return on investment? 50%? No, it is 250%. OK, even after deducting the opportunity loss for not putting the $50000 to receive compound interest, the net return is still far more substantial than most investment.
What most people forget is that when investing in property, they only pay a small proportion of the total initial cost, but reap all the capital gain before tax in the end. No bank deposit can give you this kind of return.
Commenting on “Home prices continue downward trend”
http://smh.domain.com.au/real-estate-news/home-prices-continue-downward-trend-20111031-1mr9p.html
When you buy an investment property, you pay say 20% and borrow the rest. If the property is worth $250000, the total rental receipts breakeven after 7 years, and the property has increased by 10% in value, that is $125000, what is the return on investment? 50%? No, it is 250%. OK, even after deducting the opportunity loss for not putting the $50000 to receive compound interest, the net return is still far more substantial than most investment.
What most people forget is that when investing in property, they only pay a small proportion of the total initial cost, but reap all the capital gain before tax in the end. No bank deposit can give you this kind of return.
