In Benefits of a Buyer Agent, Buying Property, Economics & Finance, Property Investment, Property Market

What should I do about the mortgage?

The answer depends on your investment strategy and plans, and also on your stage in life.

Australia as a nation, has some of the highest priced property in the world; even in Adelaide, a median-priced house costs several years’-worth of median household income.

So having a clear plan and strategy regarding debt may be the difference between your property funding your lifestyle, or your work-life feeding your property!

Your investment plans should include strategies to address:

  1. Contingency planning for rising interest rates & property market volatility.
  2. Diversification; there are several ways to diversify in property:
    1. Various types of residential property – houses, units, redevelopment and so on;
    2. Commercial property
    3. Specialising in a specific locality
    4. Sharing ownership with others
    5. Renovate and resell

    In any case, it makes sense to consider your properties along with the rest of your investments – how do they affect each other?

  3. Cash-flow. I’ve always thought it bizarre that a person would buy a rental property, knowing that it won’t deliver positive cash-flow for years to come; on this I agree with Robert Kiyosaki, who famously wrote years ago that unless a property delivers positive cash-flow from the outset, it isn’t really an asset.
  4. When we think that “this time it’s different”, and take tactical, rather than strategic steps to guard against what we think is the worst possibility, yet fail to consider alternative outcomes (positive or negative), we’ve really missed the point.
  5. We always must choose between irrational negativity and rational positivity — optimism that understands that while we can never know the future in terms of change, progress & innovation, still, those who follow the irrefutable testimony of history – that Optimism is the Only Realism – will always be the winners.
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