6 PRINCIPLES OF GENERATIONAL WEALTH CREATION THROUGH HOME OWNERSHIP
SIX PRINCIPLES OF GENERATIONAL WEALTH CREATION THROUGH HOME OWNERSHIP
- You must Save
Keeping a % of the money you earn in a savings account is the first step to a long road of wealth. e.g If you save 20% of a salary of R25 000pm for 5 years you will have R300 000 before interest. This could be used as a deposit for a property.
- You must adapt the right mindset
Wealth starts in the mind first. Creating the intention for financial security. Seek opportunity. Create vision. Build relationships. Have patience. Acquire knowledge. Keep focus and take action.
- Have a goal or action plan
Educate yourself on the market.
Decide which area you would prefer to invest in and outline the pros and cons of the area.
Find an experienced estate agent who knows that area and market and can offer you real time analysis of the current market.
Don't be afraid to take some risk. Property is a long-term investment and so even if it is not cash flow positive from day one, over time the property will become cash flow positive and then you will start seeing the rewards.
- Minimise your risk
Be prepared for worst case scenarios. Have good an experienced real estate agent guide and assist you with the legalities of owning property and how to manage the income efficiently.
- Building up your ASSETS
Over time as property prices increase and with inflation, one will see that equity becomes available as the value of the property goes up. The difference between the new value and the current debt is the equity available. Anyone can tap into this equity if they can prove that they have the income to finance the additional equity and, in most cases, this could come from the rental income. In simple terms you could get paid out the value of your property without selling your property basically, by taking a second mortgage out for the value of the property. This money should only be used to purchase another asset to grow the portfolio.
- You must start now
To create a positive net worth that keeps going upwards and secures your financial future and the generations after you to come, you need to start now.
