Why will leveraged property perform so well in this current environment?

By Amanda Alba | News & Articles

Nov 16

First and foremost, the lower the interest rate, the lower the cost repaying the debt. If the Reserve Bank sets rates at zero per cent, it is likely that banks will not be able to charge much interest at all.

As inflation sets in, the prices of goods and services, including property and rental prices, will rise.​

The one thing that won’t go up in value is old mortgage debt.​

We have all heard stories from our parents and grandparents about how much they bought the family home for 30, 40 or 50 years ago. My parents purchased their home for $13,000 in the late sixties. It is now worth over a million dollars. It wouldn’t take long to wipe out this debt in today’s money.

The difference now is that inflation is likely to come about in shorter cycles thanks to interest rates being the lowest they have ever been and the looming threat of another GFC on the horizon.

HOW CAN YOU WIPE AWAY DEBT TO CREATE A DEBT FREE INCOME EVEN QUICKER IN THIS KIND OF ENVIRONMENT?

Since the value of both the property and its rental income are subject to inflation, and debt is not, quicker cycles of inflation will provide an opportunity to pay down debt over a shorter period of time.

This may mean that within 20 years of purchasing your investment property, the weekly rent has gone up so much that the debt you incurred at the time of purchase will be like nothing. It will be a small debt, easy to pay off with only a year or two of rental income.​

This will allow investors to achieve a passive income stream over a shorter period of time than ever before. As inflation surges on, the value of rent will rise – allowing investors to make money in inflated terms.

In a nutshell, this process uses leveraging to transfer savings into an asset base that pays an inflated income.​

CONTACT US AT BEYOND WELATH GROUP and discover how to create a balance property portfolio today!

About the Author

Amanda Alba has a proven track record within the Real Estate industry over the last 20 years and has helped many happy customers. This can be attributed to her excellent customer service skills. She wants to share her knowledge with you so that you can make the right investment decisions and reach your financial hopes and dreams. Amanda is especially passionate about helping women increase their wealth and gain financial independence so that they are prepared for any unplanned circumstances and will be able to live comfortably in retirement. To do that she will assist you in developing an investment strategy tailored to your individual needs. "Create the highest, grandest vision for your life. Then let every step move you in that direction" ~ Oprah

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