Real Estate Matters: Property Vs Shares

Juliet Risdon is a Director of JML Property and a property investor. Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive an

Which will give you solid returns in turbulent times

If you have a pension plan, pay into an insurance scheme or contribute to a mutual fund, you own shares.
There is an ongoing debate about the merits of owning shares over property. Shares are more ‘liquid’ (easier to sell), they are quicker to buy and sell. They do not demand large sums of money to be invested.
Yet anyone who has looked at their shareholding statements recently may wish they had invested their money somewhere else.
Property is certainly a less glamorous way to invest, and usually means holding or keeping an apartment for a long period of time in order to grow your wealth.
But that is the beauty of property. Unlike shares, which can easily fall through the floor and drop to a ‘zero’ value when a company goes out of business, property will always be in demand. Why ? Because we all need somewhere to live.
Property is often ignored by people with a ‘get rich quick’ approach to life because of the perceived time required.
Ironically, property is the way that most wealthy people accumulate and hang on to their money. With a clear plan, anyone can benefit from the long-term advantages of property ownership.

Financial Independence and Retirement

One couple that we know started buying property 7 years ago. Instead of investing in a mutual fund or shares, they decided to buy investment apartments.
They started with very little money, and borrowed from friends and relatives in return for part ownership of properties. 7 years later, they already have 4 income producing properties providing a rental income of more than $30,000 per month.
Ah, but what about the loans from the bank ? Yes, they still owe the bank some money, but now their ‘equity’ in the properties, that is the difference between what they owe to the bank and what the property is worth, is more than 60% of the property value.
The rental income pays back the loans from the bank, and at any time they could sell 1 property, and the profits would pay the loans from 2 others. In 8 years time, all the property loans will be re-paid, and they will have monthly income of over $30,000.

Paying For The Children’s Education

Another investor we know looked at different ways to pay for their child’s education. Eventually, they struck upon the easiest way. Property.
The principle is almost the same, but in this instance the investors continually paid down the debt to the bank with the rent money and extra payments.
6 years later, by the time the children turned 18 and went to university, the properties had very small amounts owing to the bank. The investors then re-mortgaged the properties with the bank, and used the substantial funds to put their children through university.
The best part is that they arranged the financing so that the rental income paid back the bank loans, effectively someone else is paying for their children’s education.
When the kids finally leave university, the properties will already have built up a large amount of equity again, which they plan to use to pay for their hobby of extensive travelling.

In answer to that age-old question, there are benefits and drawbacks of owning both shares and property. However, one of them will always be in demand.

For further information please call me or visit our website Www.JMLProperty.com, or visit us on Www.Facebook.Com/JMLRealEstate we are always happy to give you our opinion and expertise whenever we can help.  
Any comments or feedback on this column are welcome, and if you have a property related question please e mail it us at: info@JMLProperty.com and we will respond to you in this column or by return E mail.