Using property as a vehicle towards a life of freedom.
Are you striving for a early retirement?
Or maybe wanna reduce your time spent working.
Property can be a excellent way to leverage your money into a growing asset base which pays for itself and that will provide you with income for life.
#1 MINDSET Before starting any investments you first need to change your mindset. Property investing is a game of finance with bricks and mortar thrown together so if you don't think of your portfolio as a business you wont get the required returns. Before you start your investing journey you need to have a end goal in mind of what you wanna achieve from property. Whether it be a passive income, a increased net worth or the ability to pass wealth through future generations. Once your goal is calculated you then need to reverse engineer fro what the end goal is back to the steps now required to achieve that.
#2 EDUCATE YOURSELF Education is the number one tool which will allow you to project yourself above others. Reading blogs, watching videos, doing courses, getting a property mentor and learning from others can be extremely beneficial. It is so important to have a good understanding of all the aspects of property investing before investing as the early stage of your portfolio is the most important.
#3 AQUIRE A SOLID BASE OF PROPERTIES TO BEGIN WITH The first stage of your investing will require a solid base of high growth potential properties usually close to CBD’s and close to strong income growth, strong populations growth and a well gentrifying area. Your first couple of properties will be hard work as the first couple may require your own savings for a deposit. But by buying properties which have the potential to grow exponentially you will be able to release equity gain to then use for deposits on future property. Not purchasing the right properties early in will slow your portfolio growth and bring the property investing to a hault.
#4 USE EQUITY GAIN TO MOVE INTO INCOME PRODUCING ASSETS Because you've purchased a solid base of properties which have grown above market average you will be sitting on equity which can be released into deposits on more properties. The next type of property needed will be high yielding properties where the rental income will be more than the repayments on the property, therefore giving you positive cashflow that can be used to further pay debt down in your portfolio. These properties can be further away from CBD’s where the growth hasn't out run the rental income yet. Commercial properties can also be extremely high yielding as the tenant pays all the outgoings but this investment requires extensive knowledge and should only be down by high income earners who can afford that level of risk.
#5 CONSOLIDATION PHASE This is where you've accumulated the required asset base needed for your retirement goal and the paying of debt begins. Selling underperforming properties in order to pay off existing debts on other properties can be a great way to accelerate this. The rental income from your properties will be paying off your debt and all your have to do is sit and wait. As your debt is been payed off your
loan to value ratio will be dropping and the amount of passive income coming into your account every week will be increasing. As rents increase and repayments decrease you will soon realise the real potential of just how powerful leverage and the world of property investing is. By just taking that first step in buying your first property you are able to create this passive income flow which can give you the freedom to do what you want in life.
PROS OF PROPERTY INVESTING
- Low volatility Compared to shares, property will only increase or decrease at a slow rate which gives you time to exit if a bad deal is done. If you follow the fundamentals with property investment you will gear yourself for excellent results.
- Rental income Property is a asset in which provides you with regular dividends. Therefore you are able to leverage your cash into a larger asset and reep the growth of that larger asset, all while recieving rental income.
- Compounding growth Property growth is compounded, therefore a increase in 1 percent growth over 20 years can result in 100’s of thousands of dollars in growth. Therefore holding property for the long term is essential to take advantage of the compounding effect.
- Physical Asset It’s a investment in which is tangible. You can drive past and go visit your investment in person, which is a nice feeling.
- It’s a simple process The actual process of investing in property is simple, but it’s putting the fundamentals into practice which is the difficult task.
Bez Property Buyers can help you purchase the right investment property and provide you with a pathway fit your your personal goals.
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Written by Tom King
Director of Bez property buyers
