No, I am not a course seller or a book writer or late night TV show promising the world. The Reality is “Through hard work ” You Can Become A Millionaire Through Property. Owning and properly managing property, exists the potential for growth of net worth….more simply, property is a powerful wealth building tool that has made millions of individuals millionaires.
The reality is rather stark! Not everyone who buys a piece of property becomes rich. In fact- many people buy property only to find stress and empty bank accounts. Two quick reasons come to mind, over gearing and bad management. We manage ourselves our Professional HMOs. We tried estate agents. They promised the world and could not let. Once we took back the Professional HMO, it was rented in days.
So – how does someone use property to truly become a millionaire? There exist several tenants to success.
Proper management leads to stronger cash flow. Cash flow is a key of property success. We aim for double digit cash flows cash on cash. The Property deals must stack up regardless if it is a buy to let or a Professional HMO. The property must cash flow strongly…at least over 10%. You need high cash flow to over come expenses. Repairs are higher or lower in different months, so it’s important to factor in voids in order to keep cash flow high.
We all know that Professional HMOs generate much higher cash flow but do require greater investment.
Property appreciation is the other key to wealth building. This means patience over long periods of time. Property appreciation is not a given however as too many think in the South. Manchester has now only started seeing appreciation since 2008. However with strong cash flows, profits were generated.
Next, loan paydown is the next source of wealth accumulation. This also takes a great deal of patience. When you buy a property with a mortgage, each month your loan balance decreases. This means, over time, your tenant is essentially paying the loan down for you, helping you build wealth automatically.
We love buying rental properties so much is because they may capitalise on all three of the wealth generators — if you buy it right. Buying it right and doing it up adds to your return. On most occasions we bring our Professional HMO properties back to the brick. This lowers future maintenance and due to the properties original poor condition most investors shy away from the works. Basically we are forcing or creating immediate appreciation on the Professional HMO right away.
Property is a vast area. I’d encourage you to not get overwhelmed, not try to learn everything. Pick one niche (like single family houses, Professional HMOs, Social HMO properties or commercial properties to convert, etc.) and one strategy (like rental, flip, etc.), and focus on that.
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