Investment Tool
Author: adminProperty Investment Tool
Why invest in property?
According to the recent survey – more than 70% of Asians going to work everyday do not really enjoy what they do. They are financially tied down with no saving after retirement.
We all know that ideas and plans are only as good as actions taken. We always get motivated after seminar or meeting or talk, but without real action to make it happen.
We can have multiple streams of income in creating wealth, and property investment is only one such possible stream that is proven to make us a millionaire. It is just like planting trees. The best time to plant a tree is 20 years ago; and the next best opportunity is NOW! In 20 years’ time, we will be a millionaire, if we take action now as illustrated by Milan Doshi in his book:’ How You Can Become a Multi-Millionaire Real Estate Investor” Otherwise we will regret again and utter the same statement: “I should have invested in this property 20 years ago, and now there is no way that I can afford to buy!”
Property Investment is one of the proven method in accumulating wealth on leverage. Leverage is an interesting thing in property investment. The concept is simple but powerful on using OPM –other people’s money to buy property to realize our big dream by getting our financier or banker to loan up to 90% and sometimes even up to 100% (with no money down) of the property value.
To simplify the whole process, here is an Investment Tool that we can use to estimate monthly cashflow, monthly installment and return-on-investment(ROI) to help us to justify our investment by just entering all the relevant data in the yellow cells.
CLICK HERE TO OPEN ER-INVESTMENT TOOL
The chart extracted below on ‘cash-on-cash yield vs % of loan’ illustrates the cash-on-cash return of our property when we borrow 10%, 50% and 90% of property price from bank. If we can get an exponential shape as shown by the chart below, our property is worth borrowing/leveraging – i.e. the more we borrow, the higher is our return. While these are fairly good estimates, they are by no means accurate. A proper understanding of ROI is a prerequisite for investing wisely. So, don’t forget to calculate and compare the ROI of the various investments in our portfolio.
Cash-On-Cash Yield