Wealth tips for real estate investment
In addition to offering outstanding opportunities in real estate investment, Better Planet Investments also gives you experienced advice on making your money work for you.
Here's an example of some of the wealth tips that we give our clients:
The 2% Rule
If you borrow money, and loan out that same amount for a rate that's 2% higher than you are being charged, you will create wealth. In fact, if this wealth tip was all you did for investing, you would be set for life.
Having a line of credit can really come in handy for this simple wealth building technique.
If you have a good credit rating, you can take out money on a line of credit and receive a low interest rate. And if you secure it against your home, you can get even lower interest. Then all you need is an investment that gives you a minimum of 2% more than the loan rate, and you'll be making money every month.
Here's a simple example of how this wealth tip works:
Suppose you borrow money and your monthly interest payment on the loan is $200. If you then invest the same amount of money and receive a 2% higher rate, your income from that investment might be $350 per month. You pay your monthly payment back on your line of credit each month and get to keep the difference of $150.
You are borrowing money to make more money. That's an excellent use of leverage. It's exactly what we do, and it's exactly what almost every wealthy person has done.
Dealing with Debt
There is such a thing as good debt, such as a home mortgage that allows you to extend your investment capabilities, or a loan that allows you to apply the 2% rule above. And then there is bad debt, such as credit card debt, which simply has to be paid off and adds nothing to your financial leverage.
If you find yourself burdened with too much bad debt, you need to immediately start putting strategies in place to get out of it. Using a debt consolidation service is usually not a very good option, as they are in business to make a profit from you, and will just add to your overall debt load.
Here are three steps to follow to deal with your bad debt:
- Stop increasing your debt. If you have an addiction to using credit cards, cut them all up right now. If you absolutely must have a credit card for work purposes, keep the one with the smallest credit limit and only use it when you absolutely have to.
- Organize your debt. Make a list of all of the debts you owe, in order of amount. Keep track of all of them over time.
- Start paying them off from smallest to largest. This may seem counter-intuitive, but if you keep trying to pay off your largest debt first, it will take you a very long time to get anywhere.
If you ever have trouble paying your creditors, honesty is the best policy. Lies and false promises will only antagonize them, whereas if you explain your financial situation and your debt management program, they are much more likely to work with you to extend the terms of your repayment.
Following this program will soon have you in a positive financial position, in which you can make your money work for you. Investing in a real estate company like Better Planet Investments is an excellent choice to help build your capital.
Putting leverage to use
We understand the power of leverage and the fundamental difference between good debt and bad debt. Our real estate dealings use leveraged money from lending institutions and investors like you, and everyone makes money along the way.
Banks make money investing in us — and they want us to make money so they can get their cut. Money flows in and out and gets magnified up the line. For those who understand the 2% rule and can make use of it, this is truly a win-win wealth tip for everyone involved.
To read more about the outstanding investment opportunities that we offer in Ontario realestate, visit one of these pages:
The benefits of investing in Ontario real estate...
How we put your investment to work...
