In Australia over the past 50 years property has averaged around 10% p.a. compound growth. Plus, ask your bank for the pre-approval of your investment loan so that you know how much you can borrow prior you hunt your properties. Most banking institutions and building societies in Kenya have realized the potential the option has and have developed programs targeted to boost group investments – it is based on the idea of creating a savings and investment opportunities.
If this also grew at 10% then in 7.2 years your investment would be worth $400,000.00. Meaning that by leveraging your investment you have gained an additional $190,000.00. This is because the risk of a particular investment increases as interest rates increase.
But instead of doing unnecessarily expenses we should start investing in financial instruments. Corporate bonds are competitive, depending on the company and its financial position and hence have higher returns compared to treasury bonds. I’ll throw in a Fund D for fun to show how a really low-cost investment pays off.
Rental properties are among the most common of the real estate property investments. Low risk investments include money market funds, certificate of deposits and some types of bonds. In the past, partnerships and limited partnerships were the entities of choice for real estate investors.
A corporation protects the shareholders from personal liability, but the double taxation of dividends and the inability to have “paper losses” from depreciation flow through to owners make a C corporation inappropriate for real estate investments. Because an LLC and a trust both provide significant benefits to the owner of real property, a smart investor should consider using both a LLC and a trust to adequately protect himself and his property.