A great way to look at property investing is with this apple tree analogy: Imagine having an apple tree in your backyard where you can pick apples to enjoy whenever you like. Someone had the forethought to plant that apple tree there for you to enjoy in the future. You need to have the forethought to plant your own apple trees now, that is, buying investment properties.
The apple tree started as a hole in the ground when someone decided to plant an apple seed. There was no immediate gratification while the tree was taking root and growing. There is a lot of watching and waiting as the tree grows until 20 years later and it has become a massive, fruit-bearing apple tree.
Figure: The growth of an apple tree
When a poor person inherits that apple tree, their logic tells them to pick all the apples, chop it down for firewood, mulch up what’s left and get a big lump sum of money for their products. They’ll use that money to have a big party or buy a car and then never make another dollar from that tree again.
Conversely, when a rich person inherits the apple tree, they know they need to make it sustainable. They’ll pick a few apples to enjoy and then plant some seeds to grow more apple trees. They’ll build a huge orchard and have a surplus of apples to sell, making them an income indefinitely.
It’s all about your perspective, the education you have and how you take action on the knowledge that you’ve got. Relating this back to investment properties, once you have saved up your first deposit, you can start accumulating properties. Buy where it’s booming and leverage from one property to the next. If you buy as many properties as you can without over-committing yourself and remain in a positive cash flow, you’ll be moving forward on your wealth creation journey.
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