Replacing earning income with passive income is a goal that many investors aspire to, whether through ownership, stock, or the management of a business. All this sounds good in theory – but if you want to create a permanent income through real estate rents, how are you going to achieve it?
Ian Hosking Richards, an experienced investor with more than 50 properties in his portfolio, is founder and director of Rocket Property Group. He says that the first step to success in this regard is to adopt the right state of mind.
"In the last 20 years, I have spoken to several hundred investors. The best performers are often not the ones who started the most, but those who were the most determined, "he says.
"Success, in fact, is more about your resources and your intentions than your resources."
The important thing to remember is, he adds, that it is not very important to know exactly how you will achieve your financial goal – the most important thing is to have confidence in achieving of your goal and expect you to succeed.
"Leverage is the key to creating wealth. The more leverage you have, the more wealth you can create. It's as simple as that, "says Hosking Richards
"The property is a class of wealthy assets so remarkable because it gives you a lot more weight than other asset classes. If you have a 10% deposit, you can borrow the remaining 90%. You can even borrow the 10% deposit plus the purchase fee if you have rights to existing property. "
Your ability to borrow, combined with your willingness to incur good debts, will be essential to achieving your financial goals. If you buy a self-financed property from the first day, all the growth of your shares is yours, without any costs of ownership.
So, what's the problem?
"Rather than a trap, let's call it an obstacle to overcome. The reality is that if you are heavily indebted, you inevitably incur a large debt, "he said.
Debt is not necessarily a challenge. In fact, once used correctly, it can be the foundation of your wealth creation process.
For more information, including the steps you can take to replace your income with real estate investments, check out the magazine Your Investment Property November 2019.
On sale at press agents and at Coles from September 26 to October 31, 2019
– or download the magazine now.
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