Now let’s apply these principles to property. With every year that property prices increase, the increase builds upon the increase of the year before. In other words price growth is compound and not linear. I’m sure you know what I’m trying to say but let me explain anyway According to the Nationwide, average house prices…
For me, the key thing is to be on the right side of compounding, and to be the beneficiary and recipient. Now, when you study compounding you’ll find some strange phenomena. Before we look at its impact upon property let’s look at a couple of simple financial examples. Let’s suppose you deposit £100 in the…
Ultimately it’s a question of degree. If your cash flow is haemorrhaging uncontrollably and you are going to go broke in a few short months, then I agree this is not a good strategy. But if you can cover the negative cash flow, either from other income or, even better, by setting aside some of…
Now, let me say straight up that I have no problem with investors creating short term gains in property. I do it myself all the time. My favoured method of doing so is refurbishment – buying a property needing some work, whether repair, improvement, modernisation and upgrading, or perhaps a combination of some or all…
It’s interesting how many people, when they find out what I do for a living, smile knowingly and say words to the effect of “ah, bad luck, it’s not possible to make money in property nowadays, is it?” I usually smile back and say something like “yes, it’s not like it used to be” and…
There are two principles that I am trying to get across, both of which are crucial for any property investor. The second principle is that ninety-nine times out of one hundred the most successful investors are the ones who come to terms with, and learn how to manage, debt, and who are prepared to be…
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…
I 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…
As 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…
Let’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.…