Real Estate Investing
When my son asked my advice on career pathways, I told him two things. The first was to pick a profession that provides challenging opportunities to learn and develop. The second was to find a profession with a steady income and high earning potential. While I stand by my advice, I’ve built on it over the years. A strong steady income is good. Knowing how to efficiently utilise it is even better.
Wherever you look these days, the narrative is the same. Home prices are simply too unaffordable for the younger generation. So how can a young person, who is seemingly up against all odds, get into real estate? One answer to this question is ‘rentvesting’.
My son began his professional career just after his 22nd birthday. He held a number of part-time jobs during his teenage years, mainly to fund his social life. However, this was the first job that was in an office setting and carried serious responsibilities.
Real estate investment is a proven pathway to wealth creation. This is probably why around 20% of Australians own at least one investment property. However, real estate investment carries significant fixed costs, in the form of taxes, rates and fees. Further, these costs apply across all stages of the property life cycle.
A real estate portfolio can be an incredibly lucrative and stable source of wealth creation for the average investor. I have been playing the real estate game for a little under 20 years now, and in that time, I have amassed a property portfolio of 12 homes, with a value exceeding A$6 million (in a prolonged depressed market).
So in terms of investment, where is a logical place to start? Both real estate and public market securities are common investment channels, and both appear to have their own set of advantages and disadvantages. The following post serves to outline some of the key factors that may help any beginner investor choose where to allocate their hard-earned capital.
So you’re at the stage in your life where you have earned some disposable income, and probably wondering what to do with it. Conventional wisdom would be to put it in a high yield savings account. If you’re feeling a bit adventurous, maybe you would consider investing in market securities, such as a stock or bond instrument. If you’re feeling particularly reckless, you may go out and buy that jet-ski you always wanted but will never use!