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RE: Smart Investing - How to maximize your profit!
Thanks for the article. Do you have any opinions on near future trend for the real estate industry (market)? Do you see THE REAL CRASH coming, as some have been giving that warning?
It really depends on location, property markets differ across countries of course... There could be a crash or there might not be, unfortunately CDOs are a thing again called "Bespoke Traunch Opportunities" which means we could have a similar collapse like '08. However, the thing about smart investing (especially in property and such like) is to protect yourself against these 'collapses' and also to start thinking big picture and long term, if you buy a property with 28% Capital / 72% Mortgage and say its value is 400k, this means you invest 112k with 288k Mortgage. Now if you rent this property (Rent usually does not decrease with a collapse of housing market it usually increases), we use the rent to pay off the mortgage, and say we break even in 5 years, also suppose that in this time the market has crashed and our house is now only worth 65% of the value purchased at which means its now worth 260k, You might say "Holy shit this has decreased and I have lost money!", No, definitely not, you just have to think big picture, you started off with 112k and in 5 years this investment is now worth 260k, that is just over 2.32x return on investment over 5 years which is pretty damn good.
Plus continuous future income (residuals if you will) from rent. Wow!
Exactly! Pretty amazing isn't it? :P That's why I'm highly vested in property
Thanx, I really never looked at it this close.
No worries mate :)