The essence of property investing is to use other people’s money (banks, other lenders, etc.) to make more money. Creating a passive income.
For example, here is a simplified way to tell the story:
1. You have two investing options:
A – $50K investing at 5% return is $2.5K in 1 year
B – $50K leveraged into a house at $500K at 5% return is $25K
2. If you buy an investment property further Income Streams will become available:
3. You can use the equity from the first investment for the deposit on your next investment property
4. Repeat steps 1 to 3 to build your portfolio.
5. You decide if and when you sell your properties and/or live off the rent.
Money while you sleep! Passive income through property investing sounds really good, and it is. The ticket to setting up a solid financial base that can provide you with lifestyle options down the track. For example, reducing your work hours or in some cases quitting work completely.
The first step is the big one, and that is the decision that this is what you want to do. Property Investing isn’t for everyone. Less than 8% of people own an investment property, that’s equivalent to less than 2 million of the Australian population. And less than 1%, approx. 20,000 people own 6 or more investment properties.
The decision to proceed down this path also needs to be accompanied by a feasibility assessment on what’s achievable and in what timeframe. Dependent on your situation, you might be in a position to work less hours, sooner than you think. Or you may need to build in additional steps in the early stages to keep things into gear. This may be contrary to your end goal of working less hours, but you may have to pick up more hours now to work less hours later.
Your goal is to get to a deposit. Put your all your focus into building a deposit. Then buy the investment property, then you are already miles ahead, and on your way to getting to building a serious revenue stream.
Motivation is a big one. If you want to get to a stage where you are working less hours, and you have a clear reason why you want this, then nothing will stop you. A ‘laser-like’ focus will make all the difference.
Just remember, everyone is in a different situation and has different plans, so don’t compare yourself to others. It’s truly a case by case approach. I would advise you to not try to work this out by yourself. There could be a better and more progressive option you miss out on because you tried to do it on your own.
You don’t have to love property to create a passive income as a property investor. But you do need to know people who love property and are also experts. This alone will save you a lot of time and mistakes. Contact us to request property advice.