Today we talk Property. Rental Property.
When you look at your Map, you see the Sun, Stars and Moon at the Top. You will remember that the Sun represents your Business, while the Stars represent your Rental Properties.
The One thing that you MUST remember today is this:
THE LIGHT IS IN THE STARTS.
What does this mean?
You will recall that it is only in Your Sun and Your Moon that you can apply Leverage. In other words, you can use your own TIME and MONEY and multiply it many times over using OTHER peoples TIME and MONEY.
Rental Property is not only the easiest, but for many of us the ONLY way to join the Rich. All while still working for a Salary.
Don’t give up your day job. Not yet. You will need that Pay Slip to quality for Bonds.
With your MOON assets, you first have to have the Money before you can Invest for growth. With property you us OTHER Peoples Money. We discuss this in more detail in Episode 14.
You buy a property worth R500 000.
Deposit is 10%, so you have to fork out R50 000. The rest you borrow. So your INVESTMENT is R50 000. We will assume at this point that the Rental Income on the property is enough to cover all your costs like interest on the bond, property taxes, etc.
If your property grows only 5% in the first year, it has increased in value by R25 000. You have invested R50 000, so the return on your Investment is 50%!!! (25 000/50 000).
Alternatively you could have invested your R50 000 with a Bank and earn say 10%, which is R5000. Or you could invest in a Stock Exchange and maybe be lucky and earn 20%. That’s R20 000.
Rental Property is the clear winner here. And it is possible because of LEVERAGE – using borrowed money.
This is a simple example and there are many other variables – most making Rental Property even MORE favourable as and Investment. For one, the price of Rental Property fluctuates much less than Shares over the long term. When I forecast and compare investments, I’m always very conservative and only increase property values with the inflation rate.
Benefits of Rental Property
- Low interest rates charged for Bonds
- Rental Income increase with at least inflation
- Your Property value increase with at least inflation
- You can outsource all the work (making the Income PASSIVE)
Bottom line: THE LIGHT IS IN THE STARTS
Rental Property is the ONLY way for the Poor Salary earner to join the Rich.
I am not a Financial Advisor, Attorney, Accountant or any other Professional, and never WANT to be. I’d rather be FREE. I share MY experience and knowledge. I don’t give advice.
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