Some people become investors because they’re not good savers.
Maybe you can’t save four to five grand a month on your current salary or your business. Perhaps you could, but you can’t say for sure that you wouldn’t spend it if you had it.
Doesn’t it feel like property investment is like forced saving?
I’d say yes, it is.
And it’s a good thing too, especially if you want to save long-term.
Invest to Save
I know that some people look at property investment and don’t see its potential. They’re worried about not getting enough monthly cash flow, prices going down, and all those things.
It’s also clear that there are a couple of things that first-time investors don’t understand.
First of all, with the right buying strategy, the value of your property will appreciate over time. And that will happen 9 times out of 10.
Secondly, for those who aren’t great at managing money or don’t need quick returns, property investment can be a set and forget it venture.
Let’s assume you can get $400,000 to $500,000 from the bank.
You can get a 3% interest rate on the loan and rent the property out for anywhere between 4% to 5%.
At that rate, it’s clear that the rent covers your bank payments, while you can keep on living your life.
See why it’s a set and forget type of investment?
Here’s another thing to consider.
Let’s assume the value of the property doesn’t go up.
It’s true that you won’t be able to get a massive return. But if you manage to pay your interest within 5 to 10 years, you can pay for your loan and you’ll still have your equity.
From there, you can continue renting the property for an additional 2 to 3% in monthly income. Or, you can sell the asset and have a nice chunk of money to do whatever you want with it.
So, let’s go back to the question…
Is property investment forced saving?
Yes, it is. But that’s what makes it a reliable option for anyone who wants to save money long-term and has a tendency to dip into their savings.
If you want help with investing and finding the right deals, reach out and give me a call at 0403341341.
Looking after your own interests is not an easy task and a burden shared is a burden halved. Michael and the team at IPPA are ready to help you today and you can start with a free 45-minute investment strategy session.