As you may very well know from first-hand experience or witnessing it happening to someone else, a high salary doesn’t always equal wealth. Money isn’t very likely to spontaneously turn into more money but real estate has the ability to all but guarantee you a return. Investing in a property can be a great way to ensure your income and financial freedom into the future but the question remains, what can you do to make the most of your income?
- A big income doesn’t automatically make you wealthy – it’s what you do with it that counts. Lower-income people can get wealthier than those in higher-income brackets if they invest in growing assets.
- There’s a difference between good debt and bad debt. Buying a flashy car may make you look successful to your clients, but having a portfolio of properties may impress them even more. Try and borrow money for appreciating assets rather than depreciating ones.
- Property leverages your time and money. Career professionals are very busy and so property is a great investment vehicle. It leverages your time and your money – both of which are limited. Once you have bought a property, it requires very little time to manage but continues to grow 24/7 in the long term.
- Do the numbers. When you take into account rental income and tax breaks, property often needs to grow by 3-4% on average for you to make money. Find an accountant (who is a property investor themselves) to work the numbers for you.
- Learn to delegate. It often pays for you to recruit other professionals to work for you. Consider hiring a buyer’s agent, valuer, accountant and renovator to work on your behalf. Clever investors spend a dollar to make two.
- Renovate to add value. Renovations often add twice their value for whatever you spend, so consider buying slightly undesirable properties and get your initial deposit to go further.
- What is cost of delaying your decision? If a $500,000 property increases on average by 10% a year, in the long term that’s $1000 a week of passive income you might be missing out on. How long do you want to delay your decision?