If you were to ask anyone why they are diving into property development and investment, they’ll have an answer for you. What I’ve found, however, is that plenty of people won’t give you the truth. They’ll think they’re giving the whole story, but often, they themselves won’t know it. Here’s why, and how to get to the genuine answer.
The property investment dream that’s widely sold centres on money. Working less and earning more. Retiring early. Passive income. These are all great achievements and are proof of success. But are they reasons to get into property investment? I would say not. Specifically, I would say they’re not powerful enough reasons. Every successful property investor needs a powerful ‘why’ to make it in the long term – believe me, you’re going to need it.
What’s your ‘why’?
Not knowing your genuine, powerful why is not unusual, and neither is thinking property investment is all about chasing money. Don’t get me wrong, growing your wealth is a fundamental milestone of property investment, but it’s not the destination. You need to have more powerful motivators to drive you on what could be a long path towards financial security.
You may have heard about finding your ‘why’. It’s a powerful concept in business: working just to make big bucks is too generic and uninspiring, instead, you need to find something personal and meaningful to drive you.
Let’s come to grips with the idea of leveraging property investment and how that’s linked to your important goals. Having purpose will truly motivate you through all the meetings, research, late nights, and hard work that need to happen before the rewards come.
How can you leverage property?
Let’s review what we’re talking about when we use the term ‘leverage’ when it comes to real estate. It refers to how much money you invest in a property compared to the property’s worth. For example, the lower the amount of cash invested, the higher your return (from value appreciation and/or rental income), or you could also say, the higher your leverage. Conversely, the larger your cash investment, the lower your ROI (return on investment).
That’s why property investors are always looking to invest in real estate whose rent and property value are rising, or are about to. It allows them to invest a small amount and receive a higher return once the property value goes up – hence the idea of leverage. As rents and the value of the real estate investment rise, their monthly mortgage for rental property remains constant, creating larger and larger profits.
Once you understand this, you will also understand that it’s not necessarily a fast way to make money. At the very least, you’re looking at a couple of years before you could see a respectable return on your investment. It’s not immediate gratification, but for your patience, if done properly, you’re also looking at being able to fund the things that are genuinely important to you.
What’s important to you?
This is a harder question than it sounds. You may initially think of something shiny or luxurious, but in my experience, those aren’t the things that are going to engage your heart with enough strength to see you through the hard times.
A better question is, what are you prepared to sacrifice for? It could be sacrificing sleep, time, or other creature comforts. That’s why your purpose when you are a property investor needs to be compelling enough to get you out of your comfort zone. Your purpose could be setting up your family financially. It could be security and peace for you and your partner when you retire. It could be having the resources to make a positive difference in the world. Or it could be gaining the freedom to live the personally fulfilling life you’ve always wanted.
Have a good think about why you want to become a property investor and make sure that the thought of it fills you with joy. That’s when you know you’re onto something that’s going to fuel your hard work and success.
Choose a worthwhile goal
Finding your personal, strong ‘why’ will take a while. You’ll need to get to know yourself very well and understand your core values and deepest hopes. Once you understand your unique goal, it may not look like anyone else’s. This doesn’t matter – all that matters is that it is meaningful to you. It will sustain and fuel you through the grind and setbacks, and make your successes all the sweeter because you’ll be achieving something truly important to you.
If you’re ready to discuss your big goals and how property investment can help you reach them, give Adpen a call. Contact us here.