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Understanding Finance

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Transcript

When thinking about property people often get lost in just the property itself What it’s going to do, where the location is, what hotspot it’s in or even the numbers on the deal itself. Now when you think of property that’s very important, but before property comes finance.

And when you think of Finance sure, there’s different strategies and different things that you can put into play. But today let’s talk about interest rates. Interest rates are at an all-time low and they may stay that way for a while Or they actually may go lower and if you’re thinking of lower interest rates what’s important to understand is how that actually impacts the Journey of your property.

You can respond in a few ways. You can basically go. Well, let me buy the same types of properties with a similar levels of cash flow and just have a better position because the low interest rates or let me try and buy properties at a higher cash flow and now with the lower interest rates they offer even more so then these things and these decisions can impact your properties cash flow in your in your type of property. You can acquire much better.

Now, if you’re thinking of an example, I can share with you. Let’s just think of properties and say an inner Market of a capital city Now in the past a lot of these were negatively gearing. Now many of this these markets are actually transitioning where negative geared assets are slowly becoming positive geared assets.

Well actually because the interest rates and if these interest rates continue to go down or to stay at these low levels. What you’re going to start to have is positive gearing assets not starting at maybe a five or a six percent rental yield like the used to but at an 80% loan, they start starting at 4% rental yields and potentially even lower if the rates come down.

So when you start to think of that you open up these markets that you couldn’t have boarden because of your thoughts of cash flow that you can buy in and also when you go into the market, you’re always buying in that now means you’re able to buy much more Properties or much higher cash flow properties. So think of that let’s not think of what’s a good yield because the version of a good yield is changing now with regards to the finance that you get on your property and that will help you explore more property options, help you navigate through more yield environments all because of Finance on your property changing.

So keep in mind interest rates are changing, they have been quite low and as a result you’re gonna open up a lot more choices on your property and it’s the finance part that’s going to do a lot of changing on your journey ahead not always just the property.

That’s it from us here at InvestorKit, the Experts in Wealth Creation, helping you take action.