Financial Planning

Think about your finances for a moment. Are you on track to meet your goals, whether they are buying a new house to live in, sending your child to college, or fulfilling your wildest retirement wishes? If you have access to additional funding currently but could use some extra income down the line, you should consider property investment.

With the recent housing boom and inevitable bust, many people consider “property investment” an oxymoron at this point. And for those looking to quickly and safely double their money, they should look elsewhere. But for those interested in getting a reasonable return on their financial investment over the long haul, with the possibility of larger returns at the end, they should consider investment properties as a strong option to achieve these goals.

The profitability of investing in residential property comes from two places over the life of the investment:

1. Monthly income — Monthly rental fees from tenants starting as soon as possible after buying  a property;
2. Property appreciation–selling the house or apartment building years after buying it, capitalizing on its tie to the inflationary economy as well as the natural lift it will see as property values continue to gradually rise, on average

Notice that #2 above says that property values will continue to gradually rise, on average. This means that you should not only expect to make most of your money over the long term, but also that over the short term, property values may decrease. This is far less true now than it has been for decades, though, because of the housing-bubble burst.

In conclusion, now is actually one of the safest times to invest in property because you have a big margin of safety on your side. In other words: because the market and economy is so low right now, you’re much safer taking a bet that whatever price you pay will be a good deal than if you’d tried to invest in property two or three years ago. We all have friends who tried that, and it didn’t work out for them because they bought at the market’s peak. But do your homework. The location still matters most, and fixer-uppers aren’t always worth it. But there are great deals out there if you’re willing to look.

One of my life goals is to invest full-time in investment properties, store a portion of my earnings in a swiss bank account (which is different from an online savings account), and invest even more in gold. This would provide financial security while also allowing me to travel throughout the world — it doesn’t get much better than that.