Debt can work for you
The main way people lose money in real estate is when they buy something too speculative and volatile, or when they are forced to sell.
If you buy median- priced, blue- chip properties in bluechip locations and have the cash flow to hold on for the long term, it rarely goes wrong.
Create a cash flow buffer from your existing equity to ensure you never have to sell.
Your lifestyle doesn’t have to sacrifice if you buy more invest- ments – even if they are negative geared.
Just a s you can use your spare equity as a cash buffer, you could use your equity to help cash flow any difference between the rent and the mortgage.
Think of it as working capital in your business.
Banks have responsible lending codes to abide by which should ensure that you do have the serviceability to cover any extra borrowings.
However not all lenders are the same, so if you want to be more entrepreneurial you need to find an entrepreneurial lender.
If you want to play things safe you should buy a home, pay it off and invest from there. However, if you want to create an extraordinary retirement, go against the crowd.
Investing can of course be risky if you don’t know what you’re doing. Make sure you hire professionals who are making money through property investment themselves, rather than people who have the qualifications but aren’t practising what they preach.
ENTREPRENEURIAL MINDSET: Using the equity in your home to invest in real estate can help generate more wealth for retirement, providing you go about it smartly.