Is it better to borrow the maximum mortgage available or to limit the amount of your mortgage so that the property is cashflow positive? Let's take a look two real life examples of one of our clients.
I thought this was a great question so decided to put it too everyone? William, a new registrant on our site emailed me during October 2005...
One of my foundation laws of investing is buy something tenantable. This simply means that you absolutely must buy something that the tenant will want to live in, and implicit in this statement is desirability.
Just wanted to tell you a quick story that happens far too often but is part of the game we play in bulk property negotiations. As a property consultancy we negotiate on hundreds of deals each year and only a handful of them ever come to fruition.
The biggest assumption that we make in property is that it will double every 7-10 years. This is based on many years of recorded property prices. It doesn't matter whose figures you believe property has consistently doubled in value over the long term.
Now some people may say that off plan is simply property "off the plan" or property which has not begun being built and technically t are correct, but let me explain why I consider it very different. It's all about structure.
Recently, I was asked "what assurances have I got that I won't lose my money if I work with you and your company?" A great question and one that I wish more people would ask before t dive head first into investing with many property clubs.
Let's look at the 2 most important financial principles that will guarantee you become a set and forget property millionaire. The first is leverage. In fact it's the lesser of the two but means that we can use the second much more effectively.
OK, time for a mathematics session so grab your calculator. Unlike buying your own home where a funder will look at the income you earn and assess your ability to repay. A buy to let mortgage works profoundly differently.
I don't believe in property hotspots! That might sound like a stupid statement coming from an experienced investor but all my training & experience in property tells me that property success is not about hotspots but fundamentals.