One word. Leverage.
The reason I believe real estate can be the quickest way to generate wealth, is because the banks are willing to lend us up to 80-90% of the total asset value.
That's how confident they are in the safety of this asset class.
They don’t do that with shares or gold. This is because they see property as a secure long term investment.
If I want to buy a $1,000,000 house, the bank is willing to lend me $800,000 of the cost. This is tax free money!
If I had to work for $800,000 I’d need to earn around $1.3 million to pay for the taxes and this would take me years.
Instead, I only need to stump up $200k of my own money or better still, use the equity from another property.
This is why 3 out of the top 10 richest Australian’s have made their money from property.
Because they use leverage.
The same tools that created wealth for these guys are available to every Australian.
It’s not rocket science but it does take careful thought and skill.
These are the key points to being a successful investor:
- Educate yourself
- Create a clear goal
- Form a strategy
- Build a team to help you achieve your goals
88% of Australian property investors get stuck on their first investment property, mainly due to not taking the correct steps.
Remember that property is a get rich slowly game.