What can you do in the time it takes for property to be profitable?
Capital gains are a wonderful thing. For property investors, it means ongoing profits when you finally sell an investment property. Alternatively, it can mean a build-up of equity that can be accessed for a comfortable retirement, or to generate wealth for your loved ones and yourself.
Generating capital through property is a long term plan.
But, as we always say, generating capital through property is a long term plan, and one that needs careful thought. In fact, the latest Pain and Gain report from CoreLogic RP Data shows us the average time over which people held property before making a profit - and it's quite considerable.
For example, over the December quarter of 2015, 88.6 per cent of homes sold by property investors made a profit. The average time that a house was held when it was sold at a profit was 10.4 years in Brisbane, while the time period that people owned homes sold for a loss was 5.2 years.
In fact, everywhere in the country, homes held for longer tended to sell at a profit. It's a testament to the long-term planning that has to go into property investment. But 10.4 years can seem like a long time to wait for a profitable home! So, we've come up with a few activities you could do in the meantime while you wait for those capital gains.
Complete a doctorate
Feel like you missed out on an opportunity to do a longer course at university when you were young? If you have the financial means to do so, then you could actually complete a full doctorate course and take a gap year in the time Brisbane residents held their profitable properties! Let's break it down:
- About four years for a Bachelor degree with Honours
- Another one or two years for a Masters Degree
- Finally, as many as three years for a Doctoral Degree
So you're looking at about nine years of study in total. Maybe it's time to pursue the career in sociology you always wanted!
Go to space (and back)
With a lot of hard work, you might be able to conduct a manned trip to Mars, come back, and then hopefully find your investment property has greatly increased in value! According to NASA, you'd need to do the following to become an astronaut:
- A Bachelor's degree in a relevant field
- At least a thousand hours of flying a jet as a commanding pilot
- Passing a rigorous NASA physical examination
From there, the rough estimate for a round trip to Mars is about three years, considering that you have to wait for orbits to line up, and you might stay on the red planet for up to a year. It's clearly a big investment of time - not as much as planning a property strategy though!
Create the next great work of art
It took J.R.R. Tolkien nearly 12 years to write Lord of the Rings. James Cameron spent nearly 15 years pushing for and creating his epic film Avatar. Maybe in the time it takes for an investment property to appreciate significantly in value, you could complete the next great Australian novel or film?
It would be a labour of love but in a sense, so is investing in Queensland property. You aren't getting instant rewards, but years from now you see the fruits of your labour pay off.
The median profit for Brisbane properties sold in the December quarter was $168,000.
And what fruits! The median profit for Brisbane properties sold in the December quarter was $168,000. It isn't as much as Sydney, but considering the growth that BIS Shrapnel predicts for our part of the country in the next few years, you might see significant windfalls once you decide to sell.
Even if you don't want to study to be an astronaut, it's well worth taking a closer look at your investment strategy. Get in touch with the team at Think Money to start planning yours!