Delay Cashflow Gratification
We all agree that planning for the future is a smart move. But the temptation to forgo future benefits in order to reap immediate rewards is very appealing. You want good things and you want them NOW.
So how can you balance this urge in property investing? You want instant cash flow but you also want to be set up for future success.
It might not be what you want to hear, but if you can think beyond today you’re guaranteed to achieve your financial goals much sooner. By delaying your cashflow gratification, you will make quality investments that set you up for the long haul.
Let’s make sustainable investments
A lot of people fall into the trap of prioritising cash flow when making property investments. This can lead to their undoing.
Let’s take Sarah as an example. She’s searching for a second property. The look of a new and glossy apartment is attractive to her, the rental yield is high and so she jumps on the opportunity and makes her purchase. What she doesn’t realise is that the area has experienced little to no capital growth and remains stagnant for years to come. Without capital growth, her dream of purchasing a third property comes to a complete halt.
So many things other than cash flow need to come into play when making a sustainable investment purchase. Capital growth, risk, potential for interest rates to increase, and your personal goals all need to be factored into the decision.
How to avoid bad property acquisitions
The key to selecting a quality asset is considering the opportunity for capital growth. The reason why this is so important is as a property’s capital growth increases, this opens up equity to you that can be put to work. This enables you to grow your portfolio faster and meet your outcomes.
Just picture you have a $1 million asset base with an above average 7% return. Sounds great, right? But what if you were able to leverage capital from that $1 million asset base to grow it to a $3 million asset base. You don’t have to be a rocket scientist to see which is going to give you a better cash flow in the long term.
Don’t fall for the temptation of instant cash gratification. If you want help building a sustainable property investment portfolio, book a discovery call now.