The truth is before you even buy your first investment property, you need to ensure your mindset has been shaped & focused to be a Successful property investor.
Buy Assets, Not Liabilities
This is a concept that was popularized by Robert Kiyosaki. He shares that you should always focus on buying assets that put money in your pocket and not liabilities that take money away from your pocket.
Unfortunately this results in too much unnecessary focus on Rental Income because of the deep-seated belief that rental income will go directly to your pocket.
There is also a lot of unnecessary focus on the other expenses of buying a property like:
- maintenance fees
- legal fees
- stamp duty
- agent fees
The truth is if you focus solely on Rental Income and all the other expenses that come with buying a property — you will NEVER even take the plunge to property investment!
Properties Are Assets With Value That Grows Over Time
If a bank were to look at your net worth, they would classify any properties that you own as an ASSET. This is a fact recognized anywhere in the world.
Do you agree with me that as a whole, over a period of time, property prices have proven to RISE?
If you do your research with URA website, you can find the growth in property prices.
Now in Singapore, there is a belief that you need to accumulate large sums of money to buy a property. The reality is not many people have huge sums of money lying around.
The solution to purchase a property then is through a Bank Loan.
Let’s look at some numbers.
Property Price $1.4M
Down Payment (Capital) $300k
Passive income $1k
So based on these figures, you might conclude that you will make a nett profit of $1,000 every month.
That conclusion is actually… WRONG.
Now you have to break the $4K instalment into 2 parts to really understand property investment.
In the $4k instalment or mortgage:
- $1.5k goes to the bank as interest – the money the bank needs to make.
- $2.5k goes to your “Property Savings Account”
The goal of this Property Savings Account – is to help you OWN a fully-paid up $1.4 million property.
Do you see how property investment is a mindset that you need to cultivate – that the mortgage you are paying helps you to own an ASSET?