Property is a great investment,
Recently a successful developer pointed the following out to me, when you buy and sell property via tradational methods you are always buying and selling into the same overall market, yes it will go up and down and you can buy when its low and make money when its up and also capital growth overall but you always have to have your money invested and carry the risk, ie your liable for the loan repayments.
The point he was making to me, was you always need the money invested in the property to create any cashflow and unless you have a signifcant portfolio it takes time to create this cashflow and as the portofio grows the risk also increases.
His point was this, what people really want is the cashflow from the asset or the passive income, not the asset or the property its self.
I thought it was intresting, what do other people think that have significant investments in property, would this be a true statement?
You can call something an asset if it generates money for you, even when you don’t work, including when your sleeping.
The whole idea of investing is to make money and what he said about what people want is correct, we want the property because it’s a cash cow, we suck on it as long as possible and sometimes, sell it off to reap a handsome reward and move on.
Cheers,
SerkanI think what he is saying is that you have all this money tied up while investing in property, but the direct passive cashflow (money in your pocket not on paper)is limited, that most money from property is made via capital growth, but even when you buy and sell, your still buying and selling in the same overall market, so the money you get from selling is still being invested or used, its not free to be used on what you want.
Example you would need around 1 mill invested in property fully paided off to produce 3 – 4 K.
I dont know many people that have 1 mill laying around spare.So what would be better to have:
1. 1 million invested returning 3 – 4 K passive and associated risk
0r
2. 1 million in your pocket plus the 3 – 4 K passive incomeIt was just an intresting point and another way of looking at it.
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