I tell my clients from the beginning of our relationship that the only way you could possibly lose money is property is when you sign something. The simple way to not lose any money is never sign anything. Simple, but doing that, you'll never MAKE money.
This where property gets exciting, interest rates are low, properties are increasing in value the whole market seems unstoppable and it probably is for a time at least. This is the time you can make an offer on a property and be gazumped right afterward.
This is the "boring" phase of the property cycle. Your property will remain at the same value or perhaps increase in line with inflation but not much more. So property bought in this phase is unlikely to be easily sold or refinanced in the short term.
As much as possible is the short answer, but in truth you should have a reasonable idea through your property club BUT do not take this at face value. I use a simple rule of thumb for my clients; I call it the "2 rents in property".
We have previously discussed the fact that the perfect deal does not exist and that you'll have a long wait for one to come along. The moment you say that it's is the wrong time to buy you are actually saying one of two things...
One of the biggest challenges a property club face is the need for sales versus the need to fully inform clients. Most of the clubs around have opted for sales over education and do not fully inform clients of the risks involved.
This question needs to be broken into two questions. Should I ever pay off my home? Should I ever pay off my investment properties? Let's deal with each, one at a time.
I always weigh up the initial capital investment of any opportunity and against the property valuation and as long as this comes to less than 10% of the valuation, I invest. There are some caveats, but in general this works most of the time.
This strategy goes against every other strategy that l speak about because it's not about maximising your ROI. It's simply about saving your portfolio should you be faced with worst case scenario, it's like an insurance policy for your portfolio.
This perhaps the simplest of all strategies. Quite simply it is buy 7-10 properties and keep them for 7-10 years and you will have secured your retirement. Let's look at how and why...