Detailing Your Investment Goals
We have mentioned before that property investing is like any other form of business and a business plan should be written to make sure that you stay focused on what you are doing. That is an all encompassing statement because a good business plan for property investing should have absolute detail in it so that you are searching for a particular type of property.
The final goal
I am often asked, “how many rental properties are needed to enable a person to retire?” The answer is not the number of properties, but the income from the properties that you own which is the important thing. It could be 1 or it could be 10 depending on what the return is from each property and on its leveraging.
So, what is your goal?
• Is it to have no job and financial freedom before retirement age, or
• To have enough money to live on in retirement
The answer to these questions is very relevant because it will affect how you put your business plan together.
No job and financial freedom
To be able to grow your rental income at a rate that is fast enough for you to be able to live off the income requires, in most cases, that you leverage your initial investment.
By purchasing low and selling high you are leveraging at a faster rate and by doing this several times and increasing your capital faster, you will over several years, grow your total wealth much faster and it should allow you to become a full-time property investor. This way, if all should go to plan, you will be able to give up your job and work fully on growing your investments.
Retirement income
The strategy for investing to eventually live off your property income is a strategy that uses the buy and hold method of investing. Over time a property portfolio is built up using the capital growth of each property to purchase another.
You can see that the two different attitudes and goals will relate directly back to your business plan.
Filed Under: Property Investment • Property Investment Tips • Quantity Surveyor
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great article…. yes the buying and holding aspect is so important… the great thing about property over time is that it generally increases in value… rather than assets like cars etc… that just keep costing you money!