Why do Successful Investors Purchase Brand New Houses?
(or why should I speak with an experienced Financial Advisor)
Wealth Creation by Harold Upton BSc (Hons) Dip FP - September 2006
The answer is simple; that is a vastly increased profit for the same outlay, same risk and same investment return! The explanation is a little more complex but relates to better tax deductions for new property over old property and better borrowing capacity for property over shares.
You can create (see example below) a $300,000 nest egg in 7 to 10 years and save about $7,000* a year in Tax with a brand new investment property.
Mr & Mrs Investor can afford $140 per week and they pay 31.5% tax (including Medicare) and have a $40,000 line of credit (or available equity) secured against their home. They want to improve their financial situation over the next 10 years and want our help.
What are their options?
- Save $140 per week in a cash account; or
- Borrow to invest in an older house costing $140/wk; or
- Borrow to invest in a brand new house costing $140/wk; or
- Borrow to invest in shares costing $140/wk.
What can Mr & Mrs Investor purchase or Invest?
- Cash
- They can save $140/wk
- No borrowing because the cost is higher than the return
- Old Property (no depreciation)
- Maximum purchase is $250,000 and costs $140/wk
- Brand New Property (with depreciation)
- Maximum purchase is $365,000 and costs $140/wk
- Shares
- Maximum purchase is $64,000 and costs $32/wk so we also invest $108/wk to purchase more shares
The Power of Financial Planning!
After 10 years, and a similar investment commitment, Mr & Mrs Investor can have;
- $356,385 cash (tax paid) or $788,008 of assets by
- Investing $50,704 into a Brand New Investment Property
- $193,176 cash (tax paid) or $491,788 of assets by
- Investing $51,139 into an Old Investment Property
- $201,109 cash (tax paid) or $290,321 of assets by
- Investing $66,787 into a Share Portfolio
- $86,673 cash (tax paid) or $86,673 of assets by
- Saving $72,800 in the bank!
Do you want a $300,000 nest egg in 7 to 10 years?
Do you want to save about $7,000* a year in Tax?
If you do please call our Wealth Creation expert Harold Upton now on 0408 000 555.
Existing investors should consider purchasing another investment property using the growing equity in their current investment property before the next boom starts.
New investors should strat their future wealth creation NOW and purchase a quality new home in SEQ Queensland before the next boom.
DISCLAIMER: This example is based on one set of variables - a different set of financial circumstances may give a different result - CONSULT a Financial Planner to confirm what is best for your personal circumstances.