Posts Tagged ‘Buy’

What’s so sexy about it?

Thursday, September 4th, 2008

Why do I think property is such an amazing investment?  Well, I really don’t think there is any other investment nearly as sexy as property.  Oh, I know, there is no other investment nearly as exciting as shares and stocks.  The immediacy, the fact that you can watch the graph with its ups and downs all through the day, that is something.  The feeling you get when the market drops right down at opening, the enjoyment as you see it gaining and edging upwards through the day to close higher than the day before.  I know of few other things as exciting.  But I will never call it sexy!

 

Property is something else again.  I cannot follow the changes in value even day to day.  In fact, I cannot even do it week-by-week or month-by-month.  I don’t even do it annually.  Nothing exciting here.  In fact, it is a bit boring.

 

But, I did something that I cannot and never will do with shares – I borrowed money to buy the property.  Now consider this:  I don’t have the money to buy a property, but the bank lends me the money.  So I acquire an asset of several R100 000 with no money.  What will happen with this property over time?  It will increase in value, not with the same up-and-down volatility of shares, but it will still increase in value.  It is also less likely to decrease in value to the same extend as shares will. 

 

What happens to the money I owe to the bank?  Well, if I want to, I can repay them within 20 years.  Then the property, (yes, the same one I bought with money I did not have!) is only mine!  Nobody else, not even the bank, owns anything of it.  That’s super sexy, don’t you agree?

 

But, there is something even sexier – ever since I bought it, I have been receiving an income, rental, on my property.  That income continues and increases for as long as I have the property!  That is why I sincerely believe that there is no other investment that can help you to become financially free as easily, with low risk, as property.

 

It is sexy in the extreme.

 

Do YOU Suffer from The Icarus Syndrome?

Wednesday, August 27th, 2008

I am not a very patient person, I like to keep moving.  I will much rather drive 10 km further and arrive 10 minutes later, than waiting in a stop-drive queue.  But, I am growing older and wiser, so I have learned that impatience many times have very bad consequences.  So I now control my impatience as best as possible.

 

Do you know the story of Icarus (from Greek Mythology)?  Icarus’ father made him wings from wax and feathers.  He warned his son not to fly too close to the sun.  But once he started flying, Icarus was overcome with joy and the exuberance that flying like that must surely have on anyone doing it.  Icarus forgot his dad’s warning and came too close to the sun.  The wax melted and Icarus fell into the sea and drowned.  It is sad, but once the wings started disintegrating, there was nothing poor old Icarus could do to stop falling

 

In any investment, but especially property, impatience can have a financially very detrimental effect.  Impatience with property investment can be called the Icarus Syndrome.  I see it often.  There is a sense of exuberance when you buy a property and it works so nicely and easily.  And people throw caution to the wind and soar, until something happens, like a rise in interest rates.  And then they plunge, like Icarus, into a financial ocean that drowns them in no time.

 

So what am I saying?  Simply this, be patient when acquiring your proeprty portfolio.  Rather arrive at financial freedom 18 months later, but get there, than being in a hurry to get there and having to start over late in your life.

 

Take your time to acquire a real estate portfolio of quality, low risk, properties. Don’t buy too many properties faster than you can safely afford.  That is the lesson.

 

Never fly too close to the sun!  Always remember Icarus!.