2 greatest inside track property concepts

Lets look at the 2 most important financial principles that will get you on the inside track to a profitable property portfolio.

The first is Leverage, it is the lesser of the two but means that we can use the second much more effectively.

Leverage from a property perspective means borrowing capital to invest. It will take the form of either a mortgage, personal loans, credit cards. I will leave the last 2 out and focus exclusively on the mortgage aspect.

A mortgage represents huge capacity for leverage. Say you had saved £10,000 assume you could buy a property with this and that property after a year was worth £20,000. You have made £10,000 or 100% return on investment. In this example you have not used any leverage.

Now lets say you took that same £10,000 and went to a bank and borrowed £90,000 at 10% interest rate. Then using the £10,000 and the amount borrowed you bought 10 properties with your £100,000.

At the end of the same your each of your 10 properties has doubled to £20,000. You have just made £100,000 less interest of £9,000 (£90,000 x 10%) so £91,000. So without leverage you made £10,000 and with it you made a cool £91,000.

Hopefully you can see why leverage is such a great facility.

If you’d like to read about the second inside track property concept, click thru and read the whole article on my site: Inside track property concepts…

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