Debt can work for you

The Weekend Post - Real Estate - - Front Page - CHRIS GRAY

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.

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