To you, is property
an invest|
The wealth generating mechanism for property is different from shares: it's based on scarcity. As Mark Twain said: "Buy land. They're not making it anymore." That scares many people off, or they consider investing in property unethical.
But, it's been the backbone of many a portfolio leading to financial independence. Including Lacey's and Fran's.
We talk about property investing at Money School. A lot. It's one of the many choose-your-own-adventure options we think people need to understand deeply before leaping in.
You'll find our fave resources to help you learn how property investing works below.
TLDR; the highs and lows of property investing
Like all investment options, there are advantages and disadvantages to property.
Here's a quick summary of the main pluses and minuses (by no means an exhaustive list!):
(-/+) Ethics
Some people consider property investing unethical because it increases competition among buyers. But there will always be a need for rentals, as owning doesn't suit everyone. It's up to the landlord whether it's rented ethically.
(-) Expensive
You generally need tens or hundreds of thousands of dollars to get started in property. Then there's the costs while you own it - insurance, rates, maintenance. It can really add up.
(+) Leverage
Typically, investors will need a loan (mortgage) to buy a property. You put down the deposit but get all the upside growth potential (minus costs).
(-) Risk of leverage
It's great to have all that upside potential, but if the property price goes down, you may find yourself owing more than the value. This can eventually lead to bankruptcy.
(+) Cheaper options
You don't have to invest in a specific property. You can still get an indirect investment through the stock market by buying into a real estate investment trust, or REIT.
(-) Not liquid
Getting your money out of property is rarely quick. It can take several months to sell a property, tying up any money you've got invested.
(+) Can be improved
Whether it's subdivision, renovation or some cosmetic upgrades, you can add value and potentially boost the price of your property yourself.
"Property has been the bedrock of many fortunes. It's also been the impoverishing and sometimes bankrupting of them. When you invest in property, you're not just betting the money you have now. You're betting the money you'll earn in the future too, because whatever debt you accept will have to be repaid."
Lacey Filipich, Founder and Author of Money School
Excerpt from 'Money School: Become financially independent and reclaim your life'
Learn about property
Whether you're thinking of buying a home or you're looking to invest, these links can help:
Rent vs Buy?
Which is cheaper in the long run? Our blog and downloadable calculator can help you work it out :)
Offset vs Redraw?
If you've got a little extra to put towards your home loan, the choice between using a redraw facility or an offset account is important
Mortgage vs Super?
One size does not fit all in answering the mortgage versus super question, especially considering the emotional and stress impacts
Listen: Podcasts
Lacey speaks about property investing regularly on radio and podcasts.
Read: Articles
Check out our articles for outlets like ABC and Kidspot, along with our in-house blogs.
Get the book
Money School's international award-winning book goes into detail on property investing.
Podcast and Radio Appearances
On property
Get Rich Slow Podcast
233. Will climate change crash the housing market? (part 2)
Length (mins):
47
Get Rich Slow Podcast
232. 1 in 10 properties could become uninsurable due to climate change by 2035. What happens then? (part 1)
Length (mins):
34
The Growth Concept
How to Protect Your Wealth in an Uncertain Future: Climate Change, Property & Investing
Length (mins):
59
ABC Radio Perth
The bank of mum and dad
Length (mins):
6
Articles
On property
Australian Financial Review
Offset v redraw: 4 ways to deploy a $100,000 windfall in a mortgage
School News Australia
How teachers can build financial security beyond superannuation
Nine Honey
'I will die on this hill': Expert's warning to renters being pressured to buy their own property
Money School
On property investing