Thursday, 18 September 2014

Why finance is the reason you invest in property

Why finance is the reason you invest in properties –

property itself is merely a vehicle...

We all know the quickest way to create wealth is to use other people’s money, and this is exactly what finance is all about. Property happens to be one of those asset classes that can convince other people to lend you their money easily. The underlying growth of the property itself is not necessarily better than other assets such as shares, but their price stability and sustainable growth over long term have enabled us to use more of other people’s money.

Investing in anything ( not necessarily property) is about getting the best return with the lowest possible risk.  And there is always a balance of risk and return to consider before starting our on any investment activities.

But it can also increase your risk and lower your return through


if you don’t manage it properly.

Ironically, the majority of property investors spend most of their time and effort searching for the best

property deals. They will seek finance to match the deal they find. In fact, a lot of them fall in love

with the deal even when there is very little finance available to make it a viable investment.

The message is that you should start with finance in mind before

you look for any property deals.

If you know what finance options are available to you before you start looking, you’re more likely to

stick to your investment strategy and get the return that you want.

Property deals are merely the

vehicle you choose to realise the finance strategies available to you, not the other way


. Unfortunately 90% of property investors do it the other way around.

Many property investors believe that property finance is about getting the cheapest interest rate.

Interest rate is definitely not unimportant

, but for investors who have a set of finance strategies in

place, it’s normally the last thing they consider after many other components such as:

gearing ratio


terms and conditions, etc.

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