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With growing inflation rates and an unpredictable economic future, most of us need clarification about investing. While most markets fluctuate every now and then, finding an area for long-term investment is not a piece of cake. But not anymore!
The top investment advisors in Melbourne hired in our team suggests that investing in real estate is highly safe and secure in the prevailing economic conditions. A major reason is that property investment is often long-term and much more likely to pay off some massive returns.
What makes property investment a long-term strategy and best for you? We’ve got you covered by listing down all the reasons you should consider property investment as a long-term strategy in this blog post!
Property Cannot be Easily Liquified
While other investment assets such as gold/silver, crypto currencies and even publicly traded stocks have tons of potential buyers always available, property usually takes up some time to get a good buyer that matches your pricing requirements. Thus, you cannot instantly liquify a real estate investment.
Even if you’re able to get a good buyer, for, say, the procedures of transaction and the transfer of ownership are way too long to get you through the sale very quickly. In addition, property investment can often only give you good profit and returns when sold after a certain period. Therefore, you should only invest in a property when planning for a long-term return.
It Has Higher Closing Expenditures
Unlike many investment assets, the property has a much higher closing expenditure. Buying and selling real estate often involves agents that might cost you around 2 to 5% of the total value of the asset or even more. Apart from that, you’ll have to pay the agent’s fee and appraisal fee as well as bear the expenses of mortgage origination and the inspection surveys of the buyer at the same time.
Once your property is sold, closing expenditures such as title insurance, association fee, transfer taxes, and pro-rated taxes might also cost a major chunk of your income. Therefore, selling a property just after buying it is not much profitable. Instead, property investment should be made with a long-term strategy in mind and a calculation that can pay you off the maximum after deducting all these expenditures.
Quickly Selling a Property, Can Majorly Uplift Your Capital Gains
Last but not least, property investment often falls into a long-term strategy because quickly selling your property can make you pay more and more capital gains on your profits. The rule of law suggests that if you own a property for less than a year and can sell it on profit, you’ll have to pay taxes as per the ordinary income rate on whatever profits you make. While selling your property after completing a year would imply long-term capital gains tax on your profits that are relatively less than those on ordinary ones.
Therefore, you must fully understand that property is a long-term investment and be prepared to have your money withheld for a more extended period of time. If you are planning to invest in real estate and need clarification on how to go about that, we offer the best wealth management services in Melbourne. Our financial advisors can walk you through the market and assist you in making righteous decisions.
