Why is property my favorite asset
I recently visited a friend, that just bought a piece of land. At a good price, but I still do not know after spending a few hours with him, how he is planning to monetise it.
On my side, whenever I am interested in a house or a piece of land or rarely, a shop, I know exactly what I can do with it. Not only that, but I have at least 3 ideas as to what to do and it usually includes a quick escape route, should it not be be a good deal in the end.
This is called the "3 Exits Property Strategy"
Basically it means that before you purchase a property, you come up with 3 ways to exit the deal once it is done.
In terms of price, a property can only go 2 directions in 3 different speeds. It can stay as it is. go up, or go down. It can either be in a stable way, or move out or in slow or fast.
1. Property is the ultimate value refuge
1. More than 95% of the properties that are now built are usable, can be transformed if necessary and can be use within a very short time.
2. Ultimately, most market do recover. How long are you in the game for?
3. People will alway need a roof over their head.
4. Usually in bad cycles, houses are sold and renters are on the increase, which puts owners in a good rental market. But... (this time might be different)
1.Market do tank once a while: When the horse is dead, dismount. : if a property market is going down and you think it might take a decade or more to recover, it might be time to get out.
2. Property is very tangible, it's part of its strength and it is also part of its weakness: you don't move houses across states or border.
3. Unless you use the banks, funding partners, or other arrangements, the Property business can be capital intensive.
4. You have to be near your deals, especially if you start. Whether you're planning to buy a mansion and renovate it or whether you want to create your first BnB rental in your mum's house; you have to be near the deals. You can't do this kind of deals 500 miles away, at least for the first few deals.
2. Cash flow is king
The simple rule is: do not bother with properties that are debatable or will not cash flow positively.
A debatable property is a property for which there could be a debate, on a particularity it has. For example, if you could start a debate on whether this property is too near the airport, it means it has a flaw, and if you are not buying this house for this flaw, with a specific solution in mind, then forget it. (If you are new to this, do not worry, stay here for a month a few minutes a day and you will know more about property than your banker.)
3. The skill to buy a house is different than...
Again, we shall identify and divide the skills that are required to create a substantial property portfolio; in this case we'll use a Buy to Rent strategy
Most of these skills can be delegated, but some of you have enough knowledge and creativity to start a simple "extra bedroom" project. (whether in an apartment, in a house, in a farm, in a mansion or in a Castle.) This kind of project is not difficult and is a sure way to increase your income.
As mentioned in various posts, Property is one of the best asset class to start with.
Furthermore, you can start in Property, without owning one and without getting into debts.
With the new economy, with things such as arbitrage, you can very quickly start a Short Term Rental business.
DO the Homework and stop winning about the fact that you don't have enough money!
Inspired by GM
Look around you, in you house in your family or friends house. Do you see empty rooms, empty houses, empty gardens? Start imagining what those could become and read on.
Take your notebook and write down all the ideas that come to your mind.
One idea can generate an extra monthly revenue of 500$ to 5 000$ without much work or capital.