Notorious property mogul, Donald Trump summed it up when he said, “It’s tangible, it’s solid, it’s beautiful, it’s artistic… I just love real estate.” 1
While that’s easily said by one of the most colourful entrepreneurs of our time, love him or hate him there is a lot that can be learned from his success.
We’ve narrowed down 5 reasons why you should love real estate as much as Donald Trump.
1. Every great journey starts with one small step
With a well-researched and comprehensive plan of action, anyone can invest in property. If you want to earn a sizeable income from building a property portfolio then you need to be honest about you current finances. Work out where you are and where you eventually want to end up, how much you earn and how much you can afford. That way you can calculate how you can make your investment property work for you.
2. It’s all about Capital Gain
Unfortunately it is very hard to create wealth from working alone. When you put down a deposit on a new home this becomes your money, your asset. Whilst the value of the property may grow over time, your loan remains the same. This means your asset, or your capital grows in value. This is your capital gain. The awesome thing about capital gain is that unless you sell the house, you don’t have to pay tax on it because it belongs to you!
3. Think with your head, not with your heart
Donald Trump didn’t become rich by investing in properties he simply adored. You have to step away from the concept of a ‘home,’ and step into the investor’s more clinical frame of mind. Will the house increase in value? Will it receive a steady income? Are there tax deductions available? If you can’t answer these questions confidently then you aren’t looking in the right places. Unless you’re intending to live there, you need to look at what financial income the property will generate.
4. Tax can be your friend
When you decide to invest in property you must educate yourself on what taxes affect a property investor, which is why it is so important to seek the right advice. The average Australian employee earns their money, hands some over to the Government in tax and then is allowed to spend the rest. Put simply the rich earn their money; spend it on some on legitimate business or property expenses, only to be left with a smaller taxable income. Genius!
5. You hold the key to financial freedom
Unlike investing in shares, which are subject to inflation and shear luck, property is a much safer investment. History suggests that property values are a lot more secure than share prices. In fact, the median house prices in Australia have never fallen by more than 5% in one year. Whilst there is always risk in investing, it is significantly reduced by the more control you have.