Why Property Really is a Good Investment

Why Property Really is a Good Investment

Real estate makes more billionaires than any other asset class. But what makes it such a worthwhile investment?

The answer, according to Rocket Property Group Founder Ian Hosking Richards, is leverage. Mr Richards explained what leverage is all about.

“For example, if I purchase a property for $400,000 I can put down a 10% deposit and borrow 90% from the bank,” he said.
“If that property increases in value by 10% I have made $40,000, because I have only contributed 10% of the purchase price but I get 100% of the growth.”

According to Mr Richards, the more leverage you have, the quicker you can build your wealth.

“So if it [property] goes up in value by 10% in the first year I have effectively received a 100% return on my initial deposit,” he said.
“And if the original deposit and other buying costs came from my existing equity, it means that I have borrowed the full cost and do not need to put any of my own cash in, but [I] still get 100% of the growth.”

Mr Richards recommends purchasing a property with great growth potential, which will pay for itself, even on high borrowings.

“For me, it is hard to imagine any other investment that is more attractive.”

Discover how to maximise your borrowing potential. Talk to a Capita Finance Broker.