Profit from ever increasing property values
- Investment properties that go up in value is referred to capital growth.
- An increase value provides more equity or profit if you choose to sell.
- Capital Growth can be encouraged through renovations/improvements.
The most common reason for investing in property is for Capital Growth. The two main reasons for this is that the value compounds over time and the tax advantages of negative gearing.
A common investment property strategy is to use equity in existing properties to fund the purchase of additional properties.
Another common approach is to either renovate or improve the property to cause capital growth. Properties that need renovation are becoming harder to find as investors have been doing this for a long time. There are still quite a few opportunities for improvements to a property.
Improvements can be any addition or major change to a property which will increase it’s value. This can be anything from adding a granny flat through to knocking down and building a bigger, nicer house or a couple of townhouses.
You need to be conscious of over capitalising. House prices are driven by comparable house sales in the same or nearby suburbs. Because of this spending a lot of money on the best house on the street will yield little return.