How to Increase Your Property Investments
Robert Kiyosaki is an American entrepreneur, investor and motivator. He wrote the bestselling book Rich Dad, Poor Dad, which is often regarded as the number one book on financial coaching.
Our property mentors have taken some of his money-making theories and applied them to property investment.
1) Keep some cash back
If you invest all you have in purchasing another Buy to Let (BTL), you’ll have no liquid assets left over. As a result, when that bargain of a lifetime comes along (it inevitably will as you get better at seeking out properties), you won’t have any spare cash to snap it up.
Instead, a fundamental property investment strategy is to keep aside an amount of money you can access quickly when you need it. That way, you’ll always be in a position to take advantage of opportunities when they arise.
2) Don’t trade up on your home
You may want to consider renting as many property investors do. The benefit of this is that the capital you have can be put to work investing in properties. By doing this, you’ll have money coming in on a monthly basis rather than having to pay out a large amount on a mortgage each month. . Of course, you need to consider any detrimental effect this may have on your ability to get additional mortgages as some lenders will not consider you if you do not own your own home or have a residential mortgage.
Investing your money in a BTL mortgage is what Mr Kiyosaki refers to as ‘good debt’.
3) Use as little capital as possible
This means when your investment gains in value you can use the equity to pay off the mortgage.
Putting in less of your own money gives you more leverage as you’re using someone else’s cash, i.e. the mortgage lender’s, to make your profit. You’re aiming to have enough left over to invest in another property.
You should also look at how long it will take before you get a return on your investment (i.e. get your initial investment back) as well as how big your monthly yield will be.
4) Prioritise your investment finances
It’s easy to pay off other debts rather than focussing on saving up to invest in property.
But if you don’t make it a priority, it could end up taking you much longer to save up enough to launch your property investment business. Instead, it’s a good idea to open a separate bank account with a direct debit going straight into it every month. That way, you’ll reach your goal much sooner.
5) Take the plunge, do the deal
Take action. Don’t stand on the sidelines. Do your research and if it looks like a good deal, you should grab it. If you don’t, someone else will.
You know what you’re looking for by now. A good deal is a property in an area that’s up-and-coming, perhaps earmarked for regeneration, where there’s a high rental demand.
You can reduce your risk further by making sure you get good tenants, plus you could also take out landlord’s insurance to compensate for any void periods.
6) Do your research
We often talk about doing your homework on our property training courses. One of the keys to successful property investment is to educate yourself on the subject.
Do your research. Find out whether the property you’re thinking of buying is below market value for its location. How likely are you to get tenants in this area? If you’re buying a one-bedroom property, are there plenty of businesses nearby employing young professionals? If it’s a family home, are there schools, shops and play parks in the area?
By adopting these money-making strategies, you’ll be able to increase your property investments and grow your portfolio much faster.
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