Investment Articles

There are many advantages when a Super Fund acquires residential or commercial property. Just to name a few…

A maximum 10% capital gains tax on sale of property if held for at least 12 months;

Potentially nil capital gains tax on sale of property if sold in pension phase;

Maximum of 15% tax on rental income;

All rental income received assists in paying off the mortgage loan;

Any expenses such as interest, council rates, insurance and maintenance may be claimed as tax deductions by the super fund, which potentially reduces its tax liability;

The super fund pays the required deposit (+ costs) on the property being purchased;

If you are a self employed business owner and currently own commercial property, you can transfer this property into the super fund;

A great way to generate wealth for your retirement through tax effective super contributions;

Greater investment choices and control over your future;

The super fund can pay out or reduce the mortgage at any time (subject to the terms of the relevant loan);

Through gearing, the super fund can acquire real estate property for a greater value than that of the funds ‘net worth’;

Other than the property acquired, all other super fund assets are safe and cannot be touched by any lender due to the ‘limited recourse’ provisions in section 67 (4A) of the SIS (Superannuation Industry – Supervision) Act.

A Super Fund is now permitted to borrow money and charge assets provided the borrowing complies with the following:

The fund may select any property (residential, commercial, retail or holiday units). The purchase must usually be an arms length transaction (i.e. the property is purchased from a ’stranger’). There is an exception for ‘business assets’ (i.e. property leased to a tenant who conducts a business in the property). In this case, the property may be purchased from a ‘related party’ of the superannuation fund;

The legal title to the property must be held on trust by an independent trustee (called the ‘Property Trustee’ in these notes);

The beneficial title to the property will be held by the Super Fund;

A Lender will generally lend to the Super Fund on a limited recourse basis (i.e. the Lender’s recourse will be limited to the property, thereby providing the Super Fund absolute protection for its other assets). The Fund will charge its beneficial interest in the property to the Lender. In addition, the Property Trustee will grant a mortgage over the legal estate to the Lender. Certain lenders will also require personal guarantee from all members of the Super Fund;

All rents will be paid directly to the Fund;

The Fund will make loan repayments to the Lender in the ordinary way;

Funds can deal with the property however and whenever they like, in the same way as you can deal with ‘normal’ investment properties (e.g. lease, renovate, repair, or sell);

The Fund can pay out or reduce the mortgage at any time (subject to the terms of the relevant loan);

When the mortgage is paid out in full, title to the property may be transferred to the Fund by the Property Trustee or the Property Trustee may continue as registered proprietor.

It is important that the legal structure clearly complies with all the above requirements. Failure to do so may result in the Fund becoming a ‘non-complying’ fund within the meaning of the SIS Act.

It is also important to adhere to the lenders varying trustee requirements when establishing the legal structure.

http://www.smsflending.com

© SMSF Lending |ABN: 99 262 546 801

There once was a time where the world did not think much of Canada. It was the backwater of North America, a simple piece of landmass that was known best as the 51st state. Times have changed, and Canada has moved from being on the periphery to taking centre stage.

The events of the last year has seen the emergence of Canada as an important economic actor on the world stage. Canada has emerged from the crash of 2008 and subsequent recession unscathed: the country experienced no subprime mortgage crisis, nor do we have a sovereign debt crisis like the European Union. Canada has already exited the post-recession recovery stage and entered a period of growth. Canadian banks are in sound shape, and are being regulated by sound monetary policy by the Minister of Finance and Governor of the Bank of Canada.

If you are planning to invest in real estate in British Columbia, Canada, one of the challenges is to decide on a strategy that would bring the highest returns. In the current market, you can no longer count on quick price increases and flipping. Now that real estate prices are stabilizing, one must think about long term strategy for their investment. The easiest and most popular one is to rent unfurnished property for a long-term. However, more and more landlords are realizing that they can get higher returns in short-term furnished rentals market, particularly by converting their investment property into a corporate housing unit. Corporate housing units are rented to companies which send their employees for short term projects or relocate them on temporary basis. Since the company is responsible for the rental payment and the unit, property owner can be sure that the unit will be in good condition and always paid for.

In the city of Vancouver there is an enormous demand for corporate housing because of the nature of the economy. Vancouver is home to many large corporations in a variety of sectors which often bring in employees from other parts of the country or around the world on a temporary basis. Examples of this can be found in the film, technology, software, and shipping industries. Film companies will often assemble a cast and crew for a production that lasts a few months; technology companies such as Telus will bring in staff to Vancouver for training courses that last a number of months; software companies such as EA Games will import talent from their other offices for the production cycle of a video game. Regardless of which specific industry it is in Vancouver, there will be a perpetual demand for furnished property rentals.

If you are considering investing in Canadian real estate, an investment in Vancouver apartments and condominiums is a wise one. If a landlord takes the time and spends the money to tastefully furnish the property, its possible to make an impressive return on investment that will perform continuously.

Sam Reynolds is the web-intern extraordinaire at Golden City Rentals, Vancouver`s leading provider of furnished apartment and housing rentals. If you looking for furnished apartment rentals, furnished house rentals, or Vancouver corporate housing look no further than Golden City Rentals.

What most of us have been taught about risk is wrong, and it’s probably holding you back from obtaining real wealth.

Conventionally we’re taught that there’s a continuum of risk starting with low risk investments at one end of the spectrum to highly speculative, risky investments at the other. We’ve been led to believe that any investment can be placed somewhere along this continuum and in general, the higher the risk, the greater the potential rewards.

The fundamental problem with this logic is that you are taught to evaluate the risk in the investment itself. There’s something very important missing from the equation…and that’s you the investor.

Imagine you are considering undertaking a small property development. Traditionally you would look at this proposal in isolation and ask yourself, “Is this a risky venture?”

But here’s the thing: that question is impossible to answer in isolation because we still don’t know enough about you. Have you ever invested in property before? Have you ever completed a property development? Do you have the knowledge, skills, contacts and experience required to successfully complete a property development? If you have no, or limited, knowledge about council zoning, town planning, feasibility studies, building costs and the building process, no matter how good the deal itself might be on paper, jumping head long into your first property development will be a high risk proposition for you.

Over the years I’ve seen people make a lot of money out of real estate, but over the same time, in the same market and the same economic conditions, I’ve seen just as many people lose a lot of money. The difference is in the individual investor’s skills, contacts, strengths and expertise.

So in light of this new idea associated with risk assessment, let’s take a closer look at what really makes an investment more or less risky.

1. What is your area of expertise?
Your experience and network of contacts could be your biggest competitive advantage or your most potent risk factor. If you’re investing in something that is your speciality, you start with a built in advantage that will allow you to achieve a higher return than other investors.

2. What level of control do you have?
The more control you have over your investment, the lower your associated risk.

3. Is there transparency?
The more you know about what is happening with your investments, the lower your risk.

4. How liquid is your investment?
How easy it is to access your money by selling your investment and converting it (or part of it) to cash. The more liquidity, the lower your risk will be.

5. How do you achieve your returns?
Property investors receive returns from their investment property in four distinct ways;

a) Cash flow – the rent you receive

b) Capital growth – the increase in the value of your property as the overall values in the area increase

c) Forced appreciation – the increase in value you “manufacture” by undertaking renovations or redevelopment

d) Tax benefits – such as depreciation and tax deductions

The more secure the returns on your investment, and the less dependant you are on any one of these four categories, the less risky your investment will be.

6. Is your equity safe?
Is the initial money you outlaid to acquire your investment secure should the investment fail?

7. What is your personal liability?
When you make an investment, you are sometimes required to provide a personal guarantee. If you do, this gives others (usually the banks) the right to pursue you personally for any lost funds should things go pear shaped.

8. What is the market risk?
Some risks are inescapable as they are inherent to certain markets. For example if you invest in tourism, you are subject to the market collapsing if a natural disaster occurs, such as a cyclone, a Tsunami or a disease outbreak.

9. The specific investment risk
This is the risk specific to the particular investment itself. Is it the right property, in the right suburb, at the right price and at the right time in the cycle?

When assessing risk, most investors focus only on the last two factors – the market risk and specific investment risk. This tunnel vision often means that they fail to take account of other critical underlying factors that, in many cases, are more significant.

Your take home lesson should be that while most investors spend vast amounts of time analysing the deal, you must spend more time understanding yourself better.

My risk spectrum is different to yours and relates to my expertise, my background, the things I’ve done, the lessons I’ve learned and the mistakes I’ve made. Which means that some types of investment are much less risky for me than for you!

In the same way, you have your own risk profile and you need to take the time to assess what that might be. Whenever you consider putting your money into an investment, don’t make the mistake of analysing the investment in isolation – look at that investment in relation to yourself. What type of investment choices are low risk for you? What type of investment is medium risk for you? And which type of investment is high risk for you?

Remember that even though all investment comes with some degree of associated risk, you can change this by developing expertise in an area and make the journey to your own financial freedom a low risk, high return venture.

Michael Yardney is a best selling author and one of Australia’s leading experts in the psychology of success and wealth creation through property. He is a regular keynote speaker at seminars throughout Australia and South East Asia and his opinions are frequently quoted in the media.

Subscribe to his free e-magazine at http://www.PropertyUpdate.com.au
Find out more about Metropole Property Investment Strategists http://www.metropole.com.au

“When a man tells you that he got rich through hard work, ask him: ‘Whose?’”- Don Marquis

Isn’t the property market absolutely amazing right now? No, I’m not being sarcastic nor was this written years ago. With so many bargains around (and interest rates finally coming down), now is the perfect time to take advantage.

Obviously you have to be smart about what you do, but fortunately there are great resources like Rich Dad’s Success Stories by Robert Kiyosaki and Making Money out of Property in South Africa by Jason Lee. They suggest the following:

1. Get prepared

The secret of success is to get in early and get out early. Put together a plan for each individual deal. This is a clear roadmap to follow once the property is acquired. Don’t be blinded by love to the extent that you discard basic fundamentals when making your decision to purchase. There is simply no substitute for your own intuition and gut feeling.

Choose your advisors carefully. Spend time with active property investors and use a tax consultant to help you decide on an appropriate legal structure. Ask around for good estate agents and property developers then form healthy relationships with them. Tell them what you’re looking for and get onto their databases.

2. Find a place

Jog, walk, or drive around certain area for ten minutes once a month. Look for real estate for sale signs wherever you go. Turn your attention to inner- and outer-city slums in pursuit of deals that offer potential for capital growth. Also use auctions as an alternative. Move with the middle class to new and emerging-market areas. However, if large tracts of land remain undeveloped, this can be seen as a vote of no confidence.

Call three or four agents per week and ask them to tell you about the property. Is it an investment property? What is the rental rate? What is the vacancy rate? What is the average rent for that area? What are the maintenance costs? What types of financing terms are available? Will the owner finance? Practice calculating cash flows for each property.

When you assess a property, ask yourself what you want to do with it and find out whether or not you can. It is important that the property has certain features that make it attractive to future purchasers. Consult a conveyancer to advise you on any restrictive conditions that may apply to yours and adjoining properties.

3. Seal the Deal

There is no such thing as a standard agreement of sale, so make sure you consult a lawyer. Make sure the agreement matches the property description and the description of the seller. Avoid paying a deposit, carefully review suspensive conditions, and buy yourself time to mitigate the risk. Make sure you are buying from a motivated seller and don’t give him or her too much time to think.

Make offers because someone might say yes! To start with, make use of a mortgage originator to get offers from as many banks as possible. Then make the decision yourself. Later on, you can begin by approaching the banks yourself. Look professional, come prepared, and be polite. Remember that everything is negotiable. Make the banks know that you can give them more business in the future or that you’re prepared to go to other banks.

When renovating, find yourself a professional architect and general contractor to oversee the project. Check out references, track records, financial standings, and preferably choose someone with partners. Do not commence building until the local council has approved.

Recommended Reading

Fast Forward your Retirement through Property by Jason Lee
Real Estate Riches by Dolf de Roos
The Real Book of Real Estate by Robert Kioysaki
The ABC’s of Real Estate Investing by Ken McElroy
The ABC’s of Proprety Management by Ken McElroy
The Advanced Guide to Real Estate Investing by Ken McElroy

http://varsityblah.com/

Property investors are constantly searching the globe for the next property investment hotspot to emerge somewhere in the world. Many investors are beginning to return to the Caribbean as a safe place in which to place their hard-earned cash, having had their fingers burned investing in other areas around the world.

The Caribbean has always been an attractive place to visit for a holiday, with its all-year-round, tropical climate including sunshine, sandy beaches and warm, turquoise seas. The fact that the area attracts tourists year-round in their millions makes it doubly attractive to property investors, of course. As large numbers of tourists visit the Caribbean then it follows that there will be no shortage of interest in renting your investment property.

Since the advent of popular commercial air travel in the 1960s and 70s, the Caribbean has become a regularly-visited tourist haven, which has made it the attractive investment area it is currently.

So, it has become a year round tourist centre because of its climate. It is, without doubt, a beautiful part of the world with many islands, resorts, facilities and beaches regularly being voted in the top twenty in world rankings in their specific categories.

The close proximity to the North American landmass means that visitors from the USA and Canada provide a constant supply of holidaymakers to the Caribbean. This leads to high occupancy rates in hotels and resorts. Often, during the high season between November and May, there are insufficient rooms available to meet demand.

As an investor this news is the stuff of dreams, particularly if they are investing for cash flow and capital growth rather than making a lifestyle investment purely for their own use. More visitors than rooms available drive up the rates that can be charged for rooms. Because it is the Caribbean there are many people who are prepared to pay those very high room rates.

High room rates and a year-round season promises high occupancy and excellent rental returns for investors. The Caribbean also has an established tourist infrastructure, particularly in the more popular islands such as Barbados, Dominican Republic, St Lucia, Antigua, Grenada and Jamaica. They are used to receiving tourists and providing them with the facilities to enjoy the holiday they desire and to draw them back year after year.

There is easy access to the Caribbean with regular flights into major tourist islands from Europe and North America. Some of the smaller islands, lacking international airports, are more difficult to reach but those who undertake the long journey find it exceptionally worthwhile.

There is also a long history of stability and capital growth in the Caribbean with recession having less effect there than in most leading economies around the world. Capital growth in property across the Caribbean is steady and there are no boom and bust events in the property market there. In Barbados, for example, there has been no recorded fall in property prices in over sixty years.

And, although there is demand for more accommodation to meet the growing number of visitors, the planning regulations are strictly applied. Of course, being small islands in the main, the opportunity for expansion of the property supply is limited. There are also many protected areas, such as national parks and rainforests, which cannot be developed.

For the investor, the great news is that this environment will prevent the dramatic and foolhardy over-development which has occurred in other parts of the world and has reduced the value of many investors’ property purchases. The rate of property development in the Caribbean is sustainable with new resorts meeting existing demand and individual developments often being for lifestyle investors only.

The food, people and culture of the Caribbean also make it a wonderful place to visit, with its completely laid-back lifestyle which appeals to so many visitors who want only to enjoy the outdoor activities, or often the lack of any activity.

All these attractions enticing visitors to the Caribbean all add up to a unanimous thumbs up for the property investor looking for high rental returns as a result of high room rate charges and high occupancy levels throughout the year.

Probably the two main benefits from property sought by investors in that asset class are

• Excellent rental yields and
• Consistent high capital growth.

The Caribbean offers opportunities to achieve both of these benefits.

Consequently, the conclusion is: Yes, there are numerous reasons to choose the Caribbean as an eminently suitable area for sound property investment!

For your FREE Copy of “The 7 Biggest Mistakes Made By Overseas Property Purchasers” – go here: http://www.invest5star.co.uk

The Self Storage Association (SSA) in the UK is holding a European conference to be held in June of this year in Berlin, Germany. It’s entitled “Going for Growth” and is deemed to be “Europe’s largest self storage conference & trade show.” It includes seminar sessions, trade shows, and an annual dinner and awards ceremony.

What does this mean and why is this bit of event important? It simply means that self storage investment is spreading like wildfire-especially now that there is a global recession and people are looking for investment properties that are more stable and solid. And do you know where it all started? Here in the U.S.! Now, conventions are being held in Europe to help raise awareness as to the benefits of investing in self storage-as a way of rejuvenating the flailing economy of the world.

Ok, let me tell you a bit of history. Self storage first began in the United States in the 1960s. It’s growth was monumental as people did need a place to store their stuff-well, those they can’t sell and those that hold precious memories that they can’t throw away. It reached the UK in the 80s and it has spread to Europe and Asia in the last decade. Now, the fact that self storage has broadened to include almost all the continents, it says one thing about this industry; and that is, it is something worth investing into.

If it’s not one of the places to find best investment properties, then it surely won’t be used to revive floundering economies, now would it? Let me tell you a bit more about self storage investment-just so you know what to invest in when it comes to buying commercial properties.

Self storage is recession-proof. The stuff that people buy when the economy is good does not just go away and disappear once the economy goes bad. Those that they can’t bear to auction off get carted off to a storage facility. I guess this habit is also a symbol of hope as these people have not lost hope that their lives will become better again and they’ll soon move back into a bigger place where they can bring back all of their stuff.

It has a skyrocketing demand. Like what I’ve mentioned, people always need a place to put their extra stuff in-whether the economy is good or bad. Plus, the almost 79 million baby boomers who will be retiring will need a place to store the things they can’t take into their new and smaller homes, as well as when they go on vacation. These two combined make up for a steadily increasing demand for self storage units.

Banks almost always approves loans for self storage. Why? Because self storage has the lowest bank loan failure rate at only 8% and because it presents a lower investment risk as you only need a 67$ occupancy rate to break even. It also has low development (hello, steel roof, walls and doors only!), labor costs (you only need one facility manager or even just a kiosk would do!) and operating costs (no leaky roofs and broken toilets!).

These are just the top three reasons why self storage investment is taking the world by storm! It’s spreading steadily and soon, the market will be tight with competition. So, I advise you-just like what I’ve been advised of-to take advantage of this opportunity now and be a factor in helping our economy recover.

Commercial Property Investing in Self Storage is a cash flow machine with hidden benefits.

The Self Storage Association (SSA) in the UK is holding a European conference to be held in June of this year in Berlin, Germany. It’s entitled “Going for Growth” and is deemed to be “Europe’s largest self storage conference & trade show.” It includes seminar sessions, trade shows, and an annual dinner and awards ceremony.

What does this mean and why is this bit of event important? It simply means that self storage investment is spreading like wildfire-especially now that there is a global recession and people are looking for investment properties that are more stable and solid. And do you know where it all started? Here in the U.S.! Now, conventions are being held in Europe to help raise awareness as to the benefits of investing in self storage-as a way of rejuvenating the flailing economy of the world.

Ok, let me tell you a bit of history. Self storage first began in the United States in the 1960s. It’s growth was monumental as people did need a place to store their stuff-well, those they can’t sell and those that hold precious memories that they can’t throw away. It reached the UK in the 80s and it has spread to Europe and Asia in the last decade. Now, the fact that self storage has broadened to include almost all the continents, it says one thing about this industry; and that is, it is something worth investing into.

If it’s not one of the places to find best investment properties, then it surely won’t be used to revive floundering economies, now would it? Let me tell you a bit more about self storage investment-just so you know what to invest in when it comes to buying commercial properties.

Self storage is recession-proof. The stuff that people buy when the economy is good does not just go away and disappear once the economy goes bad. Those that they can’t bear to auction off get carted off to a storage facility. I guess this habit is also a symbol of hope as these people have not lost hope that their lives will become better again and they’ll soon move back into a bigger place where they can bring back all of their stuff.

It has a skyrocketing demand. Like what I’ve mentioned, people always need a place to put their extra stuff in-whether the economy is good or bad. Plus, the almost 79 million baby boomers who will be retiring will need a place to store the things they can’t take into their new and smaller homes, as well as when they go on vacation. These two combined make up for a steadily increasing demand for self storage units.

Banks almost always approves loans for self storage. Why? Because self storage has the lowest bank loan failure rate at only 8% and because it presents a lower investment risk as you only need a 67$ occupancy rate to break even. It also has low development (hello, steel roof, walls and doors only!), labor costs (you only need one facility manager or even just a kiosk would do!) and operating costs (no leaky roofs and broken toilets!).

These are just the top three reasons why self storage investment is taking the world by storm! It’s spreading steadily and soon, the market will be tight with competition. So, I advise you-just like what I’ve been advised of-to take advantage of this opportunity now and be a factor in helping our economy recover.

Commercial Property Investing in Self Storage is a cash flow machine with hidden benefits.

In a previous article, I wrote about the importance of knowing what type of investor you are, and being that type of investor only.

I believe there are two types of investors.

- passive or buy and hold investors who create their wealth by building a property portfolio over the long-term, and
- active investors who would rather create equity or growth in their property in the short-term using such strategies as buy, renovate and sell.

Here’s a story to help explain why it is so important to work out what type of investor you are, before you actually begin investing.

I was running an information session for a Property Investment Program I facilitated a few years ago. A lady asked a question about an investment property she had recently purchased and renovated. The property was now on the market for sale. She was undecided on whether to sell it or not, and wanted my opinion.

I was unable to answer the question directly, as there were too many variables that needed to be taken into consideration. I answered her question by asking her a series of questions. Only she knew whether she should sell or not, depending on what her investment strategy was with the property.

However her question had a huge impact on me. By asking the question, it told me that she had not taken a planned approach on her property-investing journey.

This is where many people fall over. People jump into investing without having any sort of plan… and just hope they will make money.

A passive, or buy and hold investor does not buy a property with the intention of selling it. A passive investor would have completed extensive research before making the purchase. They would have only purchased property in an area with potential for high capital growth over the long-term. She is not a passive investor.

Her actions of buying, renovating and selling shows she is an active investor, or an investor creating equity in the property in the short-term through renovating, and then selling it for a profit.

She was asking the questions at the end of the project. Her intent was to buy the unit, renovate it and sell it for a profit. Before she bought the property, she should have completed extensive research, to determine if she would make a profit when she would eventually sell the property. Below is just a sample of the many questions that should be asked before a purchase is made.

o How much are comparable properties selling for in the market?
o How long are comparable properties taking to sell?
o Have renovators already entered the market? If yes, what sort of renovations are they completing?
o What is the right type of renovation in that market?
o What is the budget for the renovation?
o What return will the renovation generate?
o How does this return compare with other investment strategies?

When the research has been completed and the questions answered, you can then assess a property and know if it is an ideal property to suit your investment strategy and give you the return you are seeking. It is about getting the right property, in the right location, for the right price, for the right type of investment strategy. A property that may be ideal for a long-term buy and hold strategy, may not be ideal for a short-term buy, renovate and sell strategy.

Another option could be for her to renovate the property and keep it. This strategy is a combination between a passive and active investor. However, this strategy depends on her financial situation. Does she have the cash-flow to hold the property and build wealth in the property over the long term, or does she need to sell it for a profit in the short-term? Is it the right property in the right location for that specific investment strategy?

Let your Primary Aim tell you what sort of investor you need to be. Your property investment strategy plus your strategy for your life need to be well aligned.

Suzie Crawford works with people who are tired of working for others and want expert guidance on how to make money through property. Register here for free 8-week online Training Program PLUS receive bonuses to the value of $162. http://www.youcan.com.au

I love investing. Why do I love investing? Because from personal experience I can see it works. The source of our wealth is investing. Yes, the incomes we received from our jobs enabled us to invest, but we would not have become wealthy because of our jobs. Why? Because we always spend what we earn. Let me explain using one property as an example.

I purchased a property in 1997 for $165,000. By the end of 2007, the property was re-valued at $410,000. That is a capital increase of $245,000. In ten years, I would have found it impossible to save that amount: over $20,000 per year. Over those ten years, I was on an average salary of approximately $50,000 per annum. It would have been impossible to save an average of $20,000 per year.

To me, investing has been a form of forced savings.

As much as capital appreciation on an investment is very exciting, it also brings with it a level of risk.

The risk is the access you have to the capital appreciation. Loan products are available that allow you to re-finance your property to the current market value and you can access a portion of the capital growth for your purposes.

This access to the capital growth can either be a risk or an opportunity.

Let’s look firstly at the risk. Let’s say your Mortgage Broker tells you you can gain access to $100,000 on your property. You get very excited and buy a new car and a boat for your family. Let’s look at some of the downsides of this decision:

- Increased expenses: you now have to pay interest on the $100,000 loan. This is a personal expense you did not have before you purchased the car and boat.
- You purchased items that will decrease in value over time (depreciating items). The depreciation rate on a new car can be as high as 25% per annum. On the $50,000 car alone, without even considering the boat, you could lose $12,500 in the first year on depreciation.
- You purchased items that are unlikely to generate income for you. It is more likely they are going to increase your expenses. For example registration, petrol, insurance, mooring fees.

Going into debt to purchase depreciating items that do not generate income is not a strategy for financial independence. Cash flow and wealth are going backwards.

Let’s now look at the opportunity. Once again, your Mortgage Broker tells you you can gain access to $100,0000 on your property. Again you are excited but this time you use the $100,000 as a deposit on an investment property. Let’s look at the positives of this decision:

- You purchased an item that will increase in value over time (appreciating items).
- You purchased an item that will generate income for you in the form of rent. Property will also incur expenses in the form of interest on the loan, property management fees, rates, depreciation, insurance, etc. However your Accountant will be able to advise you on the expenses that you can claim as a tax deduction.

Going into debt to purchase appreciating items that generate income is a strategy for financial independence.

Now you might say that you also want to enjoy life and buy some lifestyle items for example a newer car or a boat. Yes, I agree with you. Life is for living. I believe it’s all about balance.

Financial independence is when your passive income covers your living expenses. If your goal is to become financially independent, you need to work on increasing your passive income, not your expenses. If your living expenses are going up but your passive income is not, you are on the path of working for a living rather than financial independence. My philosophy is to buy luxury lifestyle items when passive income covers expenses. Until then, we live within our means.

Our property investment strategy is to build a property portfolio and then just basically hold it for the rest of our lives. You can never say never, so along the journey some properties may be sold, however they are sold with the intention of buying another property that better fits with our strategy.

Given we are passive investors, it is important that we buy property in an area with high potential for capital growth and manage our cash flow well so we can afford to hold a property portfolio, without the need to sell.

Suzie Crawford specializes in teaching people how to achieve their financial and lifestyle goals, based on her own personal success. Register here for free 8-week online Training Program PLUS receive bonuses to the value of $162. http://www.youcan.com.au

Although this article might not give you every detailed question that you might have about investing, it’s purpose is to provide you with perspective and insight on how many of America’s wealthiest individuals and self-made millionaires earned their fortunes. The mental perspective with which America’s truly financially independent individuals operate will contradict nearly every thinking pattern that you have learned through observation up to this point. The reality is this. Success is not common. Wealth is not common. Thus, if you want to build profound levels of wealth you will have to consistently make the same uncommon daily small decisions that America’s self-made millionaires have made. If you to live a life that is common, do exactly what everyone else is doing.

For those starting out in the world of real estate investment, a common question is, “How can I afford to afford to buy my first investment property?” And the simple answer is this. You can’t afford the land, but your business can.

I realize that you probably navigated to this article because you are wanting to learn about real estate investment, and I promise you that we will get to that soon. However, it is very important that you mentally wrap your mind around the fact that you are ultimately going to invest in business regardless of what you invest in.

If you invest in stocks, you are investing in a business. If you are investing in real estate or a piece of property, you are ultimately investing in your real estate business. If you buy bonds, you are also making an investment in a business. Thus, if you ever want to make profound levels of wealth, you must firmly commit yourself to learning how to be great in the world of business. My friend, as you begin to invest in real estate, ultimately the VERY BEST WAY TO INVEST IS TO HAVE YOUR BUSINESS DO IT. The very worst way to invest is to do it personally.

The “average” and unsuccessful investor knows very little about running a business, and thus they invest as an individual. In fact, early in my career, I was stupid and I invested as an individual and it took the abominations of a under-performing business partner for me to realize how dangerous investing personally in things can be. Do not wait for life to teach you this painful lesson. Decide today that you will only invest as a business in the future starting now.

Your rule should be this: Only my businesses will buy my investments, period. No exceptions. Hence forth, I will never invest personally in anything. Most people are building huge levels of wealth for many reasons, but one of the main reasons is that they invest as individuals, not as businesses.

The reason that we will live in a time where we have numerous billionaires under the age of 30 is because these people had the forsight to build businesses that millions of other people wanted to invest in. When was the last time you heard a billionaire the question of how they built their wealth by saying, “Well Bob, you see the key to my billion dollar success was the plan that my financial advisor gave me. You see, by investing $150.00 per month in my incredibly diversified mutual fund I might ridiculous amounts of money. Sure, I know that there are millions of other people buying that exact same stock portfolio as me, but I got crazy lucky do the brilliance of my individual financial planner. You know Bob, I believe that 50% of Americans will soon become billionaires too if they juts invest $150.00 per month in their IRA!”

My friends, as a business coach and business trainer I am blessed with an opportunity to travel around the country and to talk to thousands of people per year. At nearly every entrepreneurship event I go to I hear someone say, “Hey, I have this great idea for this sensation product that will MAKE ME MILLIONS!” And the sad reality is that nearly every one of these “GREAT IDEAS” will never mature into anything beyond the initial sketches and ramblings of a person who experienced momentary euphoric optimism at the mere thought of their million dollar idea. That does not have to be you.

Clay Clark
U.S. SBA Entrepreneur of the Year
Serial Entrepreneur & Business Coach
Marketing Director of Fears & Clark Realty Group

http://www.fearsclark.com
http://www.makeyourlifeepic.com