Property Twins | Property Twins™
[rev_slider ]
In: Home Buyers, Property Investors2

House prices are like lolly prices! Yes really. This blog is inspired by an article in the SMH on Nestle’s pricing change over the last 24 years.

In Year 1992, Kit Kat cost $1.89!
In Year 2016, Kit Kat costs $4.89! That is a 158% price increase in 24 years!

In our current low interest rate climate, if you had $100k in the bank account in Year 2012, 3% interest per annum (if you’re lucky!) would give you $116k! i.e. equity of $16k today

Power of Leverage: In Year 2012, If you had put the same 100k to purchase a $500k property in Sydney or Melbourne with a 20% deposit and 5% purchase costs, a conservative 70% capital growth would mean, the $500k property is worth $850,000! i.e. equity of $350,000….

Today, the same $850,000 property will cost you $212,500 to acquire!

Power of Compounding: You would have learnt about compound interest in your school Maths classes. We’d have to admit, it didn’t really sink in until getting into property and working out 101 spreadsheets on how the scenarios of capital growth may unfold. We didn’t see the Sydney  boom coming, it was fun nonetheless to really see how things may unfold should we continue building the portfolio.

Tip: The banks are more willing to give you money when you DON’T need it!

The Key is: Buy as  much real estate as you can and when you can!

The more exposure you have to the real estate markets, within your risk profile, the greater you are are able to have the risk pay pay off.

Think about this…

A $1 million portfolio in 2012, is worth $1,700,000 in 2016
A $2 million portfolio in 2012, is worth $3,400,000 in 2016
A $3 million portfolio in 2012, is worth $5,100,000 in 2016
A $5 million portfolio in 2012, is worth $8,500,000 in 2016

So what are you waiting for?

Make 2016 your year of taking action and building your financial future. The decision needs to be in the present moment. It doesn’t have to be in markets that have grown, however in markets where the return allows neutral cash flow and therefore the ability to hold as many assets as possible in order to leverage other rising markets in Australia.

Keep in mind though – property does not grow in a straight line and not all properties grow in value. The purpose of this blog is to illustrate the power of compounding should you build a portfolio of well located properties that follow the fundamentals and that you continue to take action to build your dreams, you are inevitably going to get the results!

What’s your dream? Take ownership for your future.

Happy shopping!

Yours truly,

Property Twins


To Get Started: Schedule A Chat with the Property Twins Team
Join Our Exclusive Facebook Community of 6,000+ Property Investors: Property Addicts Australia
Join our Exclusive Search & Select The Right Property in 90 Days 5-Day challenge

Note: Please ensure you always seek specific specific credit, tax, financial, legal or investment advice. Property Twins' Blogs are not a substitute for personal and specific, taxation, financial, legal or investment advice
2 thoughts on “House prices are like lolly prices! Power of Leverage & Compounding”
  1. Kyle

    Great article and I feel exactly the se way about this. Just need to be able to keep leveraging to buy the next one.

    • admin

      Thanks Kyle. That’s true. Real estate has been a great vehicle….provided you buy where the fundamentals allow & it’s in a recovering or rising market! Happy shopping!

Leave a Reply

Your email address will not be published. Required fields are marked *