Custodian Wealth Builders introduces you to some of the key concepts of building wealth through property investment. Custodian WealthBuilders’ wealth building program is based on asset appreciation and compound growth. That is why it is important that the site it purchases on your behalf is located within a 30 minute drive (or 30 kilometres) of a central business district (CBD), that land comprises at least 30 per cent of the total value (land plus house), and that all efforts
are made to purchase at the lower quartile of property values.
Once the property is purchased, building begins. Once the building is finished, renting the property provides the cash flow. Legitimate tax deductions ensure your investment is easily affordable while your asset is appreciating. This system can be summarised in seven steps.
Step 1 – Buy land for capital growth:
It is important to remember that land appreciates and buildings depreciate. There is a limited supply of land so the demand for it grows as the population increases. While the cost of replacing buildings increases, the actual house depreciates in value over time as it gets older and deteriorates. If you separate the land value from the increasing prices of house and land packages over a 20–40 year period, it’s actually the land that substantially increases in value.
Step 2 – Optimise your income:
Negative gearing and leveraging makes it possible for you to build wealth with little or no capital (money), borrowing the balance of the buying costs of your first investment property. Rental income helps you service your debt. Custodian WealthBuilders aim for 100 per cent occupancy by setting rents just below the market rate and investing in areas with growing demand for rental property (resulting in a low proportion of rental vacancies).
Step 3 – Maximise your tax benefits:
Along with rental income, maximising your tax benefits is central to reducing the cash outlays on your investment property and providing a way to ‘duplicate’, that is, to increase your investment portfolio.
Step 4 – Finance to build:
This step involves:
- assessing the value of your property
- choosing a loan provider
- deciding upon a financing option
Step 5 – Aim for affordability:
Custodian WealthBuilders recommend building a portfolio of property at the bottom end of the real estate market where property is most affordable, that is, with an upper limit purchase price of within 30–35 per cent of the average income. This also ensures consistency with rental prices, as the lower the repayments, the more affordable the rent and the more accessible the property.
Step 6 – Make time work for you:
While some people trade in the property market quite successfully, the concept Custodian WealthBuilders promotes is a longer-term buying plan. The key is to buy, continue buying and then hold. This takes discipline, patience and commitment to see it through. The goal is to acquire six properties over a 10 year period. Then plan for an eight per cent per annum capital growth factor (possibly more), which has historically been the case where the selection criteria have been met.
Step 7 – Be all you can be:
Many investors like to stop at Step 6, as essentially that is where the investment lesson ends. This last step helps you get the most out of investing – and life. For some, the acquisition of wealth begins and ends with financial security and they are rightly satisfied once they reach it. Ironically, for others, while wealth may have been the driver, it has an empty satisfaction or more positively, it gives a sense of empowerment and appreciation of what is possible. Either way, they are challenged or encouraged to think beyond themselves to how else they might be able to make an impact or contribution.
Custodian Wealth Builders are considered just one of many experts in the field of property investment. They provide a considerable amount of feedback for you to be the judge! Why not go to their site and actually judge for yourself – CLICK HERE