There are two principles that I am trying to get across, both of which are crucial for any property investor.
The second principle is that ninety-nine times out of one hundred the most successful investors are the ones who come to terms with, and learn how to manage, debt, and who are prepared to be creative in finding that debt funding. For many of us going into debt and gearing up to the max is an uncomfortable feeling, and for some of us it’s a step too far. But whether you like it not, for most of us debt is a fact of property investing life and in that sense is a necessary ‘evil’.
I’ve concentrated very much on the benefits of releasing equity but the truth is the considered use of any form of debt will accelerate your business growth and returns. In that sense, not using any form of debt can be considered an opportunity lost in the context of opportunity cost.
If nothing else I hope this will encourage you to not accept the status quo but to look at what you are doing and to ask yourself whether you can be doing more. Speaking for myself I know I have a tendency to settle, and I can allow things just to plod along. Sometimes it’s only later when I look back that I see that I could have done things slightly differently, and made a lot more progress, but that I was unaware of the opportunities that were right under my nose.
This is really how I see unused equity. As I said at the outset, this might not be the right approach for everyone, but if you have unused equity, and if you agree with me that money is merely a tool to be used, then it might be worth thinking about releasing it. Then you’ll understand why it is so often said that “the difference between the rich and the poor is that the poor work for money but the rich get their money to work for them”.
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, Author & Property Investor