Common Misconceptions About Property
Before we even get started, let me share with you two of the biggest misconceptions about investing in property:
- You need to have a lot of money
- It’s risky
But, if you know how to do it properly, investing in properties is actually easy. You might possibly need to change your mindset and overcome your fears about a few things that you currently believe, and that’s the more difficult part. It is very important to have the right knowledge and mindset in order to succeed.
About 80% of wealthy people in this world have acquired their wealth through property in one way or another, be it development, flipping, investing, or simply the family home that has quadrupled in value over the years.
How Can I Make Money In Property?
This is probably one of THE key questions. It is definitely possible to earn money with property, but also to lose it. That’s why the right knowledge about selecting properties, managing risk, and other topics is of essence.
There are many different strategies available in property investing. But to start, let’s look at the two ways in which you can make money in property on a high level:
- Increase in value through appreciation
- Rental income
You will need to decide which one to focus on for each property you plan to acquire, as quite often properties with a good appreciation potential do not give a high rental income and vice versa.
One of THE key advantages you have as a property investor is the ability to create a passive income for you and your loved ones. Passive means that you do not need to work for it and the income just keeps coming every month. It doesn’t mean that investing in property is totally effortless, but you can do the work once and reap the benefits forever.
This passive income can serve as an additional source of funds, to help protect your family, to use for travel, pursue your hobbies and dreams, help the less fortunate, and potentially enable you to retire earlier and supplement your pension.
Portfolio – What Portfolio?
In the financial world the term portfolio generally refers to an aggregation of assets (and liabilities) an investor holds across different asset classes. All your properties will form your property portfolio and unless you have a company managing all of them for you, you will need to keep track of your property portfolio yourself.
How Can I Guard Against Inflation?
The interest rate you can get on many financial investments, including term deposits, is often below the rate of inflation in your country. What does this mean to you? It means you are losing money!
As well as also being susceptible to inflation, asset classes like Derivatives (e.g. options or structured products) and Alternative Investments (e.g. closed-end mutual funds) bear additional hidden risks.
Commodities (e.g. gold or silver) and Property are real assets. This means they are physical items that can be touched and felt and are of finite nature. Therefore, their prices will automatically rise if inflation rises (all other factors being equal). If inflation increases, pushing up their prices due to higher demand. In contrast, monetary assets will lose some of their value through inflation, whereas real assets increase their value and hence are a good protection against inflation.
Is My Investment Secure?
Security is naturally one of the most important aspects that each investor is concerned with. And if done correctly, property is one of the most secure investments you can make.
Property prices fluctuate much less than stock, commodity, or other prices. Over time, the value of your properties should increase and thus build up what we call equity. At the same time, equity gives you more time to react in a downtrend.
There is a constant demand for property as the population of this planet is continuously increasing and people need a place to live. The trend to urbanization has been running for centuries.
Understanding why property is such a secure form of investment is the first step to overcoming the misconception that it is risky. While certain risks do exist, those can be managed. Important is to recognize and mitigate risks so we can reduce or eliminate them.
You will most likely have heard that one of the most important aspects of selecting an investment property is its location. One tip I have shared with you already is the continued rise of urbanization.
How To Let Other People Pay For Your Investment
You invest and earn, other people pay for it. That is one of the other key advantages property has over most other forms of investments. In property investing, we are using the very same principle of leverage to our advantage. Leverage means that we are magnifying a financial outcome using given resources.
Of course there are many practical aspects involved in such scenarios, so please ensure you have the right knowledge before you embark into such ventures and consult professionals where necessary.
More Advantages Of In
vesting In Property
There are a few additional advantages of investing in property. If you buy a property, you are the “CEO”. You are in control.
Armed with the right knowledge, property deals are easy to analyze, understand, and execute. For some of the complex financial products, even sophisticated investors sometimes cannot understand them.
The Property Apprentice Master, Jochen Siepmann, wants to share the wealth of his knowledge easily and effortlessly with you for FREE. Start your journey now to greater wealth through passive real estate income and capital appreciation with one, or all, of these FREE offers:
- Download a FREE Preview of JochenSipemann’s book, The Property Apprentice NOW!
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