There are two principles that I am trying to get across, both of which are crucial for any property investor. The first is that a key tool you can use to accelerate the growth of your business is the efficient, but I stress considered, use of gearing. The reason why many investors have been able…
DetailsI wouldn’t say that in order to be a successful property investor you need to rush off and remortgage your home or your existing property investments but let’s look at the arguments for and against doing so. The first argument against is that you shouldn’t spend your capital. But in a sense you’re not really…
DetailsAs our equity increases, we’ll be even better off. This is because, as active investors, as the equity in each of the investment properties increases, we would have the option to refinance and buy yet more properties meaning we’d have far more equity than the £1.11m. But I think you get the point. Now, for…
DetailsLet’s look at what can happen when we release and invest our equity. Let’s assume that our home is worth, say £250,000 and that we have an outstanding mortgage of only £50,000. So we’re assuming that we have about £200,000 in equity. Really the figures in this example are not that important, just the principle.…
DetailsLet me say from the start, that what I am about to say is not to encourage you into debt, at least not recklessly taking on debt. I would not expect anyone to adopt the principles I am about to outline unless they were absolutely sure of what they are doing and the possible consequences.…
DetailsSensitivity Analysis graph (du dil 7)So far we have been thinking about single factors or one-off events. But the property market is highly complex and there are numerous things that can affect the performance of the market as a whole, and individual properties in particular. So you might want to do an analysis that considers…
DetailsLet’s have a more detailed look at how we can do some risk analysis. Often the different scenarios are not as black and white as our rudimentary analysis suggests and we might want to assess the risks of, and look at the consequences of, events within a range of possibilities. What do I mean by…
DetailsHaving asked the relevant questions, you may identify a scenario that could happen. Whether it is, in reality, a worst case scenario is to some extent subjective and probably a matter of semantics. But if you have identified a possible negative outcome of owning a particular property, you will need to clarify what this means…
DetailsIn my experience, from having spoken to, and from having coached, numerous would-be investors, in most instances the limiting belief behind both of these behaviours is “fear” – usually the fear of making a mistake. This in turn feeds the fear of “losing everything”. This might sound very bleak but, again in my experience, without…
DetailsI’ll give just a word of explanation about the question “Am I paying too much for the property?” This isn’t necessarily implying that you check that you are not paying more than the open market value. It is suggesting that you check against whatever criteria you have set yourself to recognise a good buy. So,…
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