This article is divided into two parts:
- Why invest?
- Why property?
Let’s look at why you would want to consider investing your money:
- You’re unhappy with your current pension fund
- You want to build extra financial security for your family and yourself
- You may want to reduce your clinical hours in dentistry and don’t want a drop of income
- You may want to get out of dentistry and want to build passive income to replace your dental income.
There are many reasons why you should invest, only you can decide why you want to do it. I would urge you to spend some time considering your ‘why’, make it clear, focused and compelling.
Now you know why you want to invest, let’s look at the preferred vehicle of the wealthiest people – property.
Why choose property?
- We live on an island that is very popular. We have a net migration of 500,000 people per year and currently we are only building 100,000 new houses per year. The UK population is around 70 million and the total number of houses is 25 million. From these figures, you can see why, on average, property prices have been and will increase year on year
- When investing in property you can use the power of leverage.
Let’s say you had £20,000 and you wanted to invest that money. You’ve done your research and narrowed your search to two options – shares and property.
You invest £20,000 in shares and after year one they have gone up by 10%. You have made £22,000. Not a bad return for your money.
Now, let’s look at if that £20,000 was invested in property. With your £20,000 you could buy a house worth £100,000. You would put in £20,000 as the deposit and the bank would lend you the remaining £80,000. For comparison reasons, let’s say the house has gone up by 10% also. So the house is worth £110,000. Your £20,000 is now worth £30,000 (£110,000 – £80,000), a massive £10,000 increase.
Thats the power of leverage and just imagine if this happened year after year. In addition to the capital gain you are building up, if bought and managed correctly, you will also receive monthly income from the rent (minus mortgage and other associated costs) (Please note for simplicity I have not taken into account buying costs for both types of assets).
What’s stopping you?
So what’s stopping you investing in property? In my 10 plus years’ experience in property investing, I have found the following five reasons why people don’t invest in property:
- Lack of knowledge – every master was once a disaster. We all started from zero knowledge in any skill that we have learnt over time. Same as dentistry, we would not embark on a new service without proper training that would provide us with the correct knowledge. So why do so many people invest in property without adequate knowledge?
- Lack of time – when I first started in property investing I would dedicate one day a week whilst carrying out dentistry the rest of the week. As I expanded my portfolio I still undertook it part time. An alternative is not to invest directly yourself. If you have the funds but not the time, then why not partner with an expert so you can both profit
- Lack of finances – there are many strategies in property investing that require very little money such as lease options and assisted sales. If you’re looking at purchasing a property, then you would need access to funds to put down as the deposit. But this money does not have to be yours; you can use other people’s money and give them a fixed return or percentage of the property profits. Lack of money is not an excuse not to invest in property.
Lack of resourcefulness
The above three reasons are resources available to us all and most people think that it is a lack of resources that is stopping them moving forwards. It’s never a lack of resources, it’s a lack of resourcefulness that holds people back.
- Impatience – property is not a get rich quick scheme, it’s a get very rich long-term scheme. Property is slow and steady. People want to see immediate results and either take large risks or can’t be bothered with property. However, if you are that way inclined, there are ways to make instant money via deal packaging
- Fear – this is one of the biggest reasons why people don’t make the jump. It’s a fear of making a mistake. Nothing is perfect and there will always be risks with everything. You take a risk when you walk out of your front door, you may get run over, you might be mugged, etc. But with proper knowledge you can reduce the risks. FEAR can stand for: forget everything and run, or face everything and rise.
In my opinion property is a great way to build passive income and achieve financial freedom. Don’t wait to own property, own property and wait.