From Your First Investment Property Onwards

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Establish a long term plan or strategy, and stick to it. Included in your plan could be aspects such as a set goal to achieve; an exit strategy; refinancing; etc. But be conservative when you refinance – keep potential interest rate hikes in mind, and don’t jump too big too soon!

Decide in which entity to buy

It is probably not the best idea to buy lots of properties in your personal name. If married out of community of property, ownership of properties can be shared between you and your spouse. Purchasing in the name of a Trust might be a good alternative, as long as you know what you are in for and understand exactly what this complies. Registering a Trust brings much more responsibility, duties, costs, record keeping and role players, etc. You can always start to buy in your personal name and if necessary, transfer to a Trust at a later stage.

Make the mind shift between good and bad debt

Realise the huge positive potential, and empowerment gained by qualifying for a bond from the bank. Financing should be pursued and your cash seen as the last resort. Therefore make full use of OPM [“other people’s money”] when purchasing and rather treat your own money like gold, especially with higher risk properties. That said, if your only option is to buy in cash – just know that this is still a much better strategy than NOT buying at all. With a cash purchase you have better bargaining ability, and won’t be affected by increasing interest rates. But the importance of sustaining a healthy cash flow throughout your involvement in property investment can never be under-emphasized. “Cash is KING”. To continue reading click here… 

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