This article aims to teach a prospective first home buyer, or someone who is thinking about investing in real estate what mistakes they should avoid.
Some people may not see these things as mistakes, and perhaps there are no mistakes, so long as you're happy with your purchase, and have enough money to live comfortably.
However, if you could save yourself hundreds of thousands of dollars, or even make millions of dollars by doing things in a slightly different way, you'd want to know about it, right?
Before You Start Looking At Properties
Before you go looking at houses, risking getting caught up in an emotional purchase, you will want to think rationally about the financial burden you're taking on.
Let's assume you're a regular couple, a newly married man and a woman, both of you might have jobs right now, but you may find that the woman, (or man), may decide to quit their job when you have kids, or you have to prepare for that eventuality.
You have to calculate into your plans one income paying for the home loan repayments, the wife and kids everything, the car repayments, the insurance, the rates, plumbers, electricians, gardeners, pay television, and more!
It's not surprising suicide rates rise dramatically at Christmas time, cause for the average man, with an average job, there's no way you could afford even half of that, or it's not easy.
This is why families are forced to live in their cars, or at least forced to sell their homes. This is why they go bankrupt and get into tons of credit card debt. One income is not enough, and that's why you should consider going into buying real estate with a real estate investment partnership first.
You should actually consider it before you get married, before you have kids, and perhaps while you're still living at home, or in a share house, so you save on rent while you buy.
The reason why buying an investment property as a team is better is because you can as a team pay off a larger amount of the capital faster, and make it positively geared.
A positively geared home brings in more from the rent you charge the tenant than the cost of all the repayments, taxes, insurance and other expenses.
In a short period of time, like a couple of years, a group of ten or so investors can pay the loan down and get it refinanced so that the property you're buying now starts paying you money.
After A Couple Of Years
You now own ten percent of fifty percent of a property, or ทาวน์โฮมมือสอง ราคาถูก five percent, the rest of the fifty percent is being paid off by the tenant, the value of the house is rising by about ten percent a year, and you also have a ten percent share of the income that's coming in.
The amount that makes it positively geared keeps coming in, and it's yours, or ten percent of it is.
How fast you do it depends on all the costs being as low as possible, for example going to a loan broker can probably save you a percentage point in the interest rates.
So, how much did that cost, and how much did you make? Let's say the house was worth a million dollars. To pay off your ten percent share of fifty percent of the property over two years would be twenty five thousand a year, and maybe a half year in advance to save up your share of the deposit, which is about ten percent.
That's sixty thousand dollars, and what you have done in two years is effectively set it up to double or triple itself relative to inflation, over the course of the loan, while it pays you money.
When you make income, you do have to account for tax, but if you get a good accountant, you might be able to find a loophole of some kind to get a refund, but you include those figures as well in your calculations, and allow for the worst case scenario.
The interest rates of your loan could rise, a couple of investors might decide to pull out, but you plan for all of that, and if it does happen, you can adjust, and keep going.
If you manage to get to the end point of the first property, you can duplicate, do the same thing over and over again, faster and faster each time.
In ten years, you should own ten percent of at least ten properties, meaning, you are a millionaire, in less than ten years, and set to be a multi-millionaire.
If you are planning this, get a quality financial advisor, home loan broker, lawyer and accountant and do it all properly, like a business, not a family, you can save that for a little while, or live simply until you're rich.
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