Hello Property Investor!
So let’s look at how successful property investors win every time!
A property that pays for itself is one where the rent and tax return received from the property exceed the costs of holding the property such as loan interest, rates, insurance etc.
Never buy properties that don’t pay for themselves.
Obviously, an investor can own an unlimited number of properties that pay for themselves, but will soon run out of money if they have to tip in their own cash to make up the difference.
It is important to remember also that any property can be made to pay for itself by reducing the amount of money owed against it, and thus the interest charged against the loan. Also, all negative properties will eventually start paying for themselves as the rent increases and if the loan decreases.
The only true way to tell if a property is going to pay for itself is to add up all the expenses and compare them to the rent and tax return received.
A word of caution when it comes to property investment and Financial Advisors. ‘Financial Advisors’ don’t really advise you on all things ‘financial’. They normally only deal in shares and insurance. As such they most likely try to steer you away from property (because they don’t get paid for it) and into something they deal with. The only problem is that, as any experienced property investor will tell you, it’s very hard for anything else to compete with property once you consider the effect of leverage and tax benefits.
[There are some Financial Advisors who are property savvy though and we can help you find one if you need one. Just email us at firstname.lastname@example.org]
To Fix or Not Fix your interest rate? That is the question!
I will finish off this series with this burning question answered tomorrow.
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