Thursday, 21 February 2008

7 Steps to Becoming a Property (Real Estate) Millionaire - Part 2: The Plan & Concept

Source: Keith Mason

The plan is to create a million dollars net worth in property, starting with little, in 10 years or less. Most working people living in Australia, New Zealand, the UK, the USA and Canada (and probably many other countries) should be capable of achieving this goal, if they set their minds to it.

The time frame of the plan will vary depending on which part of the property cycle you are beginning. The ideal time would be a few years after the top of the previous property cycle, when prices have had a correction and started to increase again, see diagram below.

The concept to get across is that to become wealthy in property, we need to be able to control an appreciating asset/s of large value, which over time will increase in value. It is the increase in value that makes us wealthy.

This is a really important concept that many people overlook, trying to find a more complicated hidden secret of a strategy. There are no secrets. Simply control appreciating assets of large enough value, and in a short time you will become wealthy.

For example, well located residential property generally increases in value at around 10% per annum, so a $1million property will increase at $100K per annum. When you take into account the compounding effect of growth, the property doubles in value in 7 years. It was Albert Einstein who quoted: “the most powerful force in the Universe is compound interest”.

Many people believe you need to own the property outright, without having debt against it, and will work really hard to pay off the mortgage. This is not the most financially smart way to go. By putting your cash into more assets, rather than pay off an existing one, you increase the value of the assets you control, which will compound for you, creating wealth much faster than paying off just one asset.

Now, let's go to the next step: Get A Deposit and Find A Great Deal.

Go to - Make Money, Get Rich, Retire Young, Become Millionaire