Property has played a major role in wealth creation over the years. Even today, property can help YOU to become financially independent. In fact, if you are still young, you can decide how wealthy you would like to be by investing in property.
If you are not so young anymore, property can still make a huge difference in your financial situation. In fact, I think that property is the only way that normal people can ever achieve financial freedom.
I am going to look at some things to consider when investing in property.
Let’s start with the well known rule: Location, location, location. Location, location, location is the most important factor when buying a property. Location, location, location is the secret that will determine if it is a good buy or not. There is only one consideration, location, location, location. That is what we hear, what we are taught and made to believe by almost everybody out there. But is it true?
No! Cashflow, cashflow, cashflow, that is what you should look at if you buy an investment. If you intend to live in the property yourself, you should, and would, consider location first. After all, I want to live in an area where I can enjoy coming home. There is a huge difference between a house and a home. And an even bigger difference between an investment and a home. So, when you buy to live there, location undoubtedly is important.
If you buy to speculate (which is not investing), the location is important. The problem is many people who cannot afford to speculate try to do so. But that is another topic.
But when you buy-to-let, cashflow is important. Cashflow determines the risk of your investment, the affordability. It does not mean that you should completely ignore location. If you buy in a slum, the cashflow will only be good on paper, since you may not be able to collect the cash!
Whenever people invest in property and run into trouble, it is normally because they have ignored this very important rule of cashflow. They cannot afford the property. And invariably they invested based on location rather than cashflow.
When you buy property for investment, you are not buying a property, but an income stream. The stronger the stream, the better. The stronger the cashflow, the more properties you can afford. The stronger the cashflow, the better your standard of living. The stronger the cashflow from your investment properties, the better the location where you can afford to live!
Are you interested to learn more about investing in Property (The WHY, HOW, WHAT and WHEN), then contact me at info@theblueroof.co.za
Next time we will look at another important point to consider when investing in property.
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