Money in the Walls of Your House

Brian’s great information showing us how to make easy money five different ways might be a month old – but the information provided should last a lifetime.

It’s got me wondering about purchasing property in my neighbourhood. The dividends could be enormous!

Warrawong Forest

Ten years ago when we bought in this area we noticed a lot of people were selling. The time was right and the market value of property was at interesting stage: Because people had money to spend, they were selling their old home to move into a bigger and better one, presumably in a better neighbourhood!

Many home-owners were tidying up backyards to remove rubbish that had accumulated, finishing renovations they’d started years earlier, replacing wiring and plumbing, and planting new petunias – all just to get a few thousand dollars extra on the sale-price.

Any entrepreneur will tell you this pretty stupid. But the average home-owner only sees the here-and-now, not what’s going to happen down the track. Jack & Jilly Smith suddenly earn a little more, so they spend a little more. They buy new clothes, cars, kitchens – and home’s.

So they spend a whole lot of money on the here-and-now, believing it will give more later. They buy a new home, they move in … and suddenly they back to where they started: Owing money to the bank!

What the entrepreneur would do is show their payslip down at to the bank and said, “I’m earning more. I want more interest. I want more capital. I want the world.” While many of us would find this ostentatious and flamboyant, the bank would have smiled and agreed. Or at least gone half way on the deal.

Your bank manager may well have rubbed his hands together with glee, but only because he also realised that the higher earnings allowed them to have a bigger stake on your first-child, oops, I mean would allow you to purchase another property and keep your existing. That’s right, keep your existing. Why sell an asset that has the possibility of bringing in revenue?

Too often we see nice little homes in the suburbs, nicely painted, new curtains, even a mowed front lawn and picket fence – being sold. Why? Because that’s what the real-estate agent told them to do. What they should also have considered is RENTING or LEASING the house. OK, so maybe you’ll get a few bad-egg tenants. That’s a risk, no doubt. But you can vet who lives in your property.

IF it’s good enough, if the location is right, you can put in 3-month agreements. This will restrict your tenants to short-term workers, possibly overseas contractors or interstate consultants. These people have money to spend – and will if the accommodation is perfect.

So, now to convince the boss (read: wife, more commonly known as SWMBO) that now we own one third of a house that has doubled in value over the last ten years, we really need to use our equity wisely.

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