The Engine Fund...
Brett Alegre-WoodChairman, YPC Group
Hey guys,
I was chatting to one of our clients who is also a pilot the other day. He was telling me about the fact that he owns a aeroplane with 4 other guys. It's a small Cessna twin engine that they use for family holidays and occasionally for business meetings.
Now before you jump up and down about the excesses of owning an aircraft and the carbon footprint it may produce the interesting thing that I got from the conversation was the fact that they had an engine fund.
The Engine Fund...
Now as you can imagine an aircraft is quite an expensive purchase but its not so much the purchase costs that kill you as much as the running costs. You normally allow about 10% of the value of a plane (or a boat for that matter) per year as running costs.
Are you interested in long term profits, passive income of £500-£1000 each month — and complete financial freedom from investing in UK properties?Sign up for my brand new, free online property course to learn the proven way to use property as a vehicle to achieve financial freedom as the recession eases and confidence grows.
This is the very same information many have paid thousands to learn! It's valued at £199 per year and each week, I'll teach you everything I've learned while building the portfolios of thousands of my clients over the last 15 years. Learn from my experience and avoid making the mistakes I made!
You'll learn all this and more in just the first 3 weeks of this course:
 Plus, a special bonus: you'll receive Brett's regular video updates, delivered straight into your inbox, where he turns on his video camera and decodes the week's property news for you!
|
Join our newsletter list for FREE today and you'll receive as a bonus a complimentary PDF copy of Brett Alegre-Wood's best-selling book The 3+1 Plan!
You'll learn the safest time-proven strategies that will guide you and grow your portfolio during any economic boom, bust, recession or downturn.The 3+1 Plan is a step-by-step guide that will show you how, with just four properties, you will be able to fund the lifestyle you have always wanted. Even before you retire! Immediately you register for our newsletter we'll send you the PDF download link for this award-winning book so you can start reading right away...
| ||||||||||||
| |||||||||||||
One of the major costs is when the engine needs replacing it is one of the biggest expenses besides the actual airframe.
Now the problem presents itself that if you fly the aircraft for say 10,000 hours and then the engine needs replacing you will need to come up with the full cost of the replacement engine. So the solution to the problem is that rather than pay a big wack of money after 10,000 hours you simply put some money aside each hour (or month) into an engine fund.
The engine fund means that once the engines need replacing you already have the capital to go out and buy it. No stress, you just get it replaced.
The Engine fund for building a property portfolio...
The engine fund is essentially the same concept for aeroplanes as we use in building a property portfolio. The provision account is a classic example of this, we put aside money upfront rather than waiting until we have to pay for the expense. Mortgage cost averaging so that we have plenty of allowance for changes in interest rates. The 2 year cash flow rule which means that we have two years of allowance.
It's these and the many other principles that I talk about that effectively mean that when its time to buy a new engine you don't have to stratch and scrap to pay for it.
If you are reading this and you don't understand fully the provision account, mortgage cost averaging, or the 2 year cash flow rule or any of the other principles and their function in building a portfolio then give the team a call and we'll explain each concept in detail.
Live with passion,
Brett Alegre-Wood
Reader comments for the article 'The Engine Fund...'
You're invited to join in the discussion of this article. Do you have advice to share? An opinion or some feedback that adds to the discussion? Feel free to add it below! (Please note though that ALL comments are checked before they're posted.)
Brett reporting from Malaysia, should we open up an office in Malaysia?
How will the Euro affect you as an investor?
Is it realistic to have cashflow positive investment property 100% of the time?
How Much Capital Do You Need To Get Started In Property Investment?
How Quickly Should An Investor Build Their Property Portfolio?
Brett reveals London's newest, still-unknown hotspots in new video