Property investment in its simplest terms is providing shelter to tenants until such time, as gains can be realized. In its best form, the operation should be funded with OPM (other people’s money) and as soon as possible, you should refinance your initial deposit away to further build your asset column.
See if we are to treat are investments as a business, and we should, we need to know our cashflow. A negative cashflow for extended periods are unsustainable even if you are getting negative gearing. You are swapping a dollar for 30 cents – this is not a wealth strategy.
Ideally you want you investments paying for themselves – in order to do that, you need healthy rents and rising rents so over time, like a small sapling, it can stand on its own two feet or in this case roots and provide you shade for years to come.
• But do we know what our ins and outs are for each of properties?
• Does it consider all the extras like, water, rates, insurance, maintenance, and land tax?
• Have our rental increases been lazy – because they are a “good” tenant?
• Is the property at its highest level or is it falling behind the pack?
If you are not evaluating the performance of every property in your portfolio – then who is? Think of them as you employees – they are working for you and your future or are you working for theirs?
By Shannon Davis – building your wealth through property