5 Motivations Behind Property Investment (Ep12)
Different people are motivated to invest in property for different reasons. These 5 motivations behind property investment are very different from each other, but can all be valid reasons for pursing a property investment.
No motivation is right or wrong, however I suggest you read through the different motivations and find out what is pushing you towards investing in property.
Each motivation has a very different investment strategy attached to it, so you want to find the right investment strategy for you.
1. Financial Freedom (Strategy: Positive Cash Flow Properties)
Financial freedom occurs when your passive income is more than your expenses. Positive cash flow properties generate a passive income as the rent pay for all the expenses and then you have some money left over.
If you are motivated by financial freedom it means that gaining more time is probably your #1 priority. You are likely unhappy and your job and want to earn passive income so you can spend your time doing what you love to do, rather than living a life you hate.
2. To Be Rich (Strategy: High Growth Property or Development)
If you want to be rich it means you want to have a high net worth. You want the fancy luxuries that come with being rich such as a big house in a desirable suburb and an expensive car to go with it.
If your motivation is to be rich then you are probably looking for the big payday. The pot of gold at the end of the rainbow.
By investing in high growth property or development you have the potential to scale your investments and gain equity fast. However, you will probably need a high income to support your investments as they are almost certain to be negatively geared.
3. Security (Strategy: Buy and Hold)
You want to create a secure financial future for yourself and your family.
You may have a lot of money invested in cash and/or blue chip stocks and you like to be conservative with your money. You don’t want to take many risks and you want slow steady dependable growth.
You will probably buy in a capital city and will hold the property for the long term, allowing the property to go up in value with the market.
4. Diversity (A mixture of strategies)
If you are motivated by diversity then you are going to want to diversity your investment strategy and thus it is hard to predict exactly what property investment strategy you will go for.
I would guess something more conservative like buy and hold so you have a property portfolio and a stock portfolio as well.
You are a jack of all trades when it comes to investing and you don’t tend to specialise or put all your eggs in one basket.
5. Lifestyle (Holiday houses)
Your motivation for investing is to improve your lifestyle.
I see this all the time when people say “I bought a holiday house as an investment property”.
Really you bought something that was going to improve your lifestyle and you justify it to yourself as an investment so you don’t feel bad about paying the mortgage on it every month. After all you get to use it a couple of times a year and it is going up in value.
Find A Property Investment Strategy To Suit Your Motivation
As you can see, when people are motivated to invest based on different criteria they tend to invest in property in different ways.
Find the property strategy that works best for you and become an expert at it.