|Is Property Investment really that risky in this sinking Real
In today's' real estate market, you hear a lot about "negative equity". So does it matter if your property falls in to negative equity? Definitely NOT.
The value of a property that you hold bears no reference to the monthly cash-flow you get from it when you run it properly.
If you buy a property for $200,000 and it produces $1,400 profit every month, does it really matter if this property you have just bought falls to $150,000 ? NO. Since it still brings $16,800 per year. It's still an 8.5% return on your investment if you bought it cash. Let's say you bought the property with 20% down. Now it's a 42% gross return on investment.
If prices to drop to $150,000 then you should do everything in your powers to buy every property in the street at this price as you will build wealth for the future. This real estate slump is forecast to last perhaps another 2 years but investors should think long term.
Property is all about producing a stable long term flow of income with very little risk. If anyone tells you its about capital growth then they do not fully understand the nature of property investments.
It's the long term flow of income that determines the value of an investment property. If the flow of income looks to become more certain or rise in value then capital gains will be experienced in the medium to long term.
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