My Favourite Wealth Creation Strategy

Property and Realestate investing is my favourite Wealth Creation strategy. Ever since I was a young child I have been involved in Property. When my father migrated from Europe, he came from an environment that was booming on the back of the rebuilding of housing from the Second World War. He became a Plumber and Electrician, they were able to do dual trades way back then in the 60's. Where he was working in Naples, (a sea side city in the Mediterranean) he was working on high rise apartments. He was asked to come to Australia to join the rest of his family and there would be plenty of work for him, as Australia was also going through a boom in the early-mid 1960's.

On arrival, he obviously went so seek employment in the construction industry. Being a migrant, his qualifications were not recognised and was told by officials that he needed to do his apprenticeship again. He didn't take to this idea of starting out on minimum wages at his age, so he went to work in factories. However, with his hard earned money, he began to buy run down houses in inner Adelaide and renovated them during evenings and weekends, of course I tagged along, then and selling them for a tidy profit. He did this several times but became worried about possible tax implication. He couldn't understand how he could get away with this. Making more money in a few months that what he earned in a factory for a whole year. He stopped doing this for many years as he was afraid of the tax man. Little did he know that there was no Capital Gains Tax at that time and a 25 cent phone call could have sorted out this question. This is where the proper education and knowing where to get it is so crucial to Wealth Creation.

The real Financial Education now is to learn how to purchase property in the right area and for a lower price than the median price for the area.  Lets look at some interesting statistics.

By the year 2056, one in four Australians will be aged 65 years and over according to recent projections by the Australian Bureau of Statistics (ABS). The ageing of Australia 's population is the result of sustained low fertility combined with increasing life expectancy. If the projections come to fruition it will dramatically change the makeup of Australia 's population which is projected to increase to between 31 and 43 million people.

With people expected to live longer, many may turn to property investment as a means of supplementing their superannuation income. According to ABS estimates 71 percent of Australians aged over 65 are currently living on incomes of less than $15,548 per annum. Property investment is definitely a strategy which can contribute to financial independence for retirement.

Ok, back to what I was saying before about purchasing property below the median house price for an area. People always say to me that it's impossible as everyone knows the value of there house and you can't find bargains.  Well lets have a look at some reasons why they may sell at below market value.

1. They don't care

Some people and institutions simply do not care what the market value of a property is. For example, take the case of a mortgagee-in-possession. If a lender (usually a bank or finance company) has taken possession of a property, they just want to dispose of the property as soon as possible.
The lender is predominantly concerned with recovering his or her mortgage on the property and the expense incurred in selling the property. While they have a duty to maximise the price, a public auction usually would satisfy an obligation to obtain a fair price. You will discover that mortgagee sales are a great place to get a property significantly below market value.

2. They don't know

Some people may not do as much research on a property as they should. They may not have bothered to discover the zoning codes in the area. There may be an interstate seller who hasn't bothered to keep up to date with market prices. There are a number of reasons why someone may not know the market value of a property.

3. They don't want to sell at market value

This is hard to believe, but some people actually don't want to sell at market value. Often it is a bitter dispute between partners (life partners or business partners) and the parties turn vindictive toward each other. They would rather see the other side suffer than win themselves.

4. They believe they don't have a choice

For some people, selling below market value happens because they don't believe they have a choice. For instance, the bank may be threatening them with repossession. Or they may have purchased elsewhere and either don't want to take out or cannot take out bridging finance. For whatever reason, in their minds they believe that they have little choice.

5. The emotional cost is worth more than the financial cost

For whatever reason, some people do not deal with pressure very well. In property there is often a lot of emotional pressure added to the situation. People become irrational especially if financial pressures are building up, or the property has been on the market for a long time. Suddenly the emotional price is high and they would rather slash the price than have the uncertainty of not selling their home or investment property. The emotional quotient is highest when the property is the principle place of residence.