Are you thinking about buying a residential investment property?
Do you really want to buy a house? Do you want to pay rates, insurance and shell out for property maintenance? In fact, many of you are homeowners already, so you’ll be paying another set of costs.
Don’t get me wrong. I’m not telling you not to buy an investment property, in fact, I think buying investment property is one of the best things people can do to improve their future financial position, but let’s get clear on why.
In the book The 7 Habits of Highly Effective People, Stephen Covey’s second habit is listed as “Begin with the End in Mind” which means:
“To begin each day, task, or project with a clear vision of your desired direction and destination and then continue by flexing your proactive muscles to make things happen.”
What most people who buy an investment property really want is a tool to help them achieve financial freedom. A money screwdriver.
In my experience, residential investment property makes a great screwdriver when the goal is creating financial equity and passive cashflow, as long as you are patient and investing for the long term.
And what is the purpose of having equity and passive income? That depends. For some people it means the ability to cover their costs so they can retire early. For others it’s paying off their mortgage. Some would like to help their children buy a home or they’d like to travel or contribute more to their community, and of course there are a multitude of other reasons. At the end of the day, having money gives you more options.
There are many different ways to achieve your financial goals. Stocks, bonds, private equity, real estate etc.. Each have different risk profiles and give you varying degrees of control.
There is no one size fits all approach to investing, so take some time before you start to get really clear on your goals. Write your goals down and refer to them regularly.
Good luck and happy investing.
John Kenel, Assured