fbpx

The Freedom Of Choice

Want our top tips for finding investment properties that PAY YOU?
  • The top eight strategies to consider when searching for positive cashflow investment properties
  • What a positive cashflow property looks like ‘on the books’. In other words, you’ll see an example cashflow analysis clearly demonstrating HOW a property can pay YOU every week
  • And much more.

Transcript

The freedom of choice. Some people say retirement, but I like to say the freedom of choice. Why I say that is when you get so into property investing or into anything as a matter of fact, a certain switch turns on and that is that switch where sometimes it’s hard to turn it off. Where property investors start to go from two properties to four, maybe four to eight, or even eight to 16 and beyond. What that switch is, is basically turning your mind on but almost never turning it off because you’re constantly seeking results, seeking that next step and that’s where the freedom of choice is something I like to say more often where you’re using your investments, using your income or passive income or your growth to actually have the choice of what you want to do, whether it be open a business, maybe it’s continue buying or maybe it’s reduced work from full-time to part-time or genuinely sit at a beach. 

But why I don’t say retirement is that many of these investors who turn the switch on actually don’t find themselves suddenly turning it off at a particular age and then finding themselves sitting at a beach forever. Now, whilst that sounds nice, I can assure you when you turn that switch on and you really get into property investing, most of the times it just becomes that choice that you’d like to have rather than doing absolutely nothing. That actually leads me on to perhaps three strategies to consider when you’re trying to attain the freedom of choice. There are many strategies in property, develop, renovate, Airbnb, cashflow. There are so many, but when it comes down to the fundamentals of achieving at passive income, there are generally three core strategies. 

Strategy one, that is acquiring more property and continuing that journey of acquiring, but as you acquire it, you find a balance between assets where you’re getting the best of both worlds in capital growth and cashflow, and some that are just very in tune for cashflow. Where you’re trying to acquire more and more so the amount of passive income starts to get larger and larger and larger as you have a bigger portfolio. Strategy two is reduce debt and then refinancing later years, because what happens is when you get a mortgage, even if you start your journey of property at 30, 35 or 25 it’s usually a 30 year loan term. Now, you can shave off the years by paying down the loan quickly, but until you actually refinance the mortgage or re-extend the term even for the next 30 years, the repayment actually coming out, it’s usually going to be the same subject to those interest rate movements. 

Now if it’s going to be the same, even if you have a high passive income unless rates are increasing rapidly to outweigh it, the amount coming out of your pockets is going to say the same as well for potentially the next 30 years. So what many people do is they focus on debt reduction, growing their property portfolio, but when they decide to stop and just focus on debt reduction, they then re-extend their terms or re-finance their terms so the newer payment based on the old debt is much smaller, but the rent and the income that you’ve had is obviously gaining over time. Now strategy number three is actually when you look at just acquire property, some of growth assets remain with cash flow assets. And what you’re really doing there is you’re acquiring, but finding a time to say stop and at that stop moment you’re looking at your portfolio and finding ones where perhaps they’ve had some great capital growth. 

You take these assets, you sell them, you use the extra money that’s coming from them to pay off debt on the very high rental assets, and suddenly you’re sitting on assets with no debt but very high rental income. So these are the three core strategies of really attaining the freedom of choice, acquire a lot more, pay down and restructure, or acquire, stop, sell and restructure with the remaining. Now, there are many, many more, but they usually are just smaller and micro versions of these three. And that’s where knowing these three fundamentals without going into, say, development or renovate or other parts of strategies are very, very important for you to attain the freedom of choice. That’s it from us here at InvestorKit, the experts in wealth creation, helping you take action.