The secret to property investment: Good property investors buy time🕰️
A very important lesson to learn early on is that to be a successful property investor, what you are really buying is time. Of course, you do need to buy the properties, but they are not the absolute key to success. By holding your portfolio in the market for long enough, you’re able to make money that can cover any problems that may arise. The main way to buy time is to maintain a healthy cash buffer.
Whether it’s an interest rate increase, an unexpected vacancy or unforeseen maintenance problems, you’re bound to encounter some issues along the way. Don’t let that deter you from investing though, because then you won’t make any money at all. You can minimise the effects that these risks can have on your cash flow with a buffer. This could be an offset account against your mortgage or a line of credit. Having cash on hand that’s easily accessible for unforeseen expenses throughout the year will save you in the long run. Then when tax time rolls around, you can top up your buffer again with your tax return.
Too many inexperienced property investors get this wrong, buying as many properties as they can and not leaving any cash in reserve. When they get caught off guard by a vacancy or maintenance costs, they either have to sell a property or default on a mortgage. Neither of which is a desirable outcome, so don’t let it happen to you!
Stay tuned for more insights from Wealth Through Property.
~Daimien Patterson