When comparing shares and property investments, consider that you buy a $10,000 share portfolio, these shares may give you a dividend of 4% and may go up by 8% in a year. When looking at property, one of the advantages with the investment in residential property is that this $10,000 investment could be used to by a $100,000 property. Whilst you would have to borrow $90,000 the leveraging that you are able to get from $10,000 is that the capital gain that you make on the property is ten times that of the share portfolio, were it to be equivalent to the same rate.
Looking further as to the reasons that residential property investment appeals to many people beyond shares, the points that are often considered
are:
Whilst, as with most investments you can deduct all of your costs such as interest, insurance, repairs and management, another deduction is also the depreciation such as fixtures and fittings and the depreciation based on the construction cost. These are non-cash deductions.
Whilst shares have the advantages of liquidity, one of the great attractions to property for many investors is the ability to have complete control over their investment such that they are the only shareholder rather than a minority shareholder.
Real estate is a tangible and secure investment and whilst property markets rise and fall, long term, property always maintains a value of which, depending upon your equity, is easy to borrow against to raise extra capital or finance for other personal needs.
Something that many successful residential investors discovered a long time ago as one of the big pluses for their investment is that there are, in actual fact, three people contributing towards their investment. When looking at the contributions, quite often 70%-80% of the contributions comes from both the tenant and the Australia Taxation Office through rent payments and tax deductions respectively, leaving quite often, the smallest contribution from you, the investor.
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