DON’T KILL THE GOLDEN GOOSE

So, now you have purchased your first industrial real estate property. What do you do with the income? Here is the number one most import thing to take away with you after you finish reading–don’t spend it! Yes, you heard, don’t spend it–not yet! The number one error I have seen new investors make is that they immediately spend the profit from their first investment. It is such a temptation to purchase a new car, leave for an expensive overseas holiday, buy a bigger house or undertake an expensive renovation. It doesn’t matter if your first investment is a $300,000 unit and you purchase a nice little $15,000 car, or if you have a $2 million dollar standalone warehouse and purchase a luxury $130,000 vehicle, the universal law is the same: If you spend your profit before you understand how to grow your profit, you will invariably remain broke and in debt, and will possibly lose your investment too. In other words, you will have killed the golden goose.

ACCUMULATE YOUR PROFIT

So, what do you do? Leave your profit accumulating in the investment bank account. Get to love the look of a high bank balance more than the look of a shiny new car, at least for the first few years. Decide exactly what you want your eventual financial goal to be. Do you want to be completely financially independent? What does that mean to you: $100,000 per year, or $1,000,000 per year? Do you just want extra money to educate your family? How much will that cost? Do you want to retire early? Do you want to travel the world when you retire, or do you want to live quietly at the beach? Start with the end dollar amount required, that is, the total cost of your desired goal, and work backwards. Here is an example. According to the HILDA report (www.melbourneinstitute.com/downloads/hilda/Stat_Report/statreport-v9-2014.pdf), the net mean Australian household disposable income in 2011 (i.e., income after tax of the average Australian household) was $79,763 annually.

For my purposes, allowing for inflation since 2011 (and to keep the maths easy)!, let’s say I want to retire on $10,000 a month. That means I need to earn $120,000 per year, from my investment portfolio. Presuming my investment portfolio is returning a profit of ten per cent, I will require $1,200,000 worth of investment properties. That is four to five small strata units if they are returning a profit of $24,000 to $30,000 each per year. My retirement strategy would therefore be to purchase four or five small industrial strata units over my working life.


 

Lillie Cawthorn, author of the bestselling book The Money Factory: How Any Woman Can Make An Extra $30,000 To $100,000 Passive Income wants to share her wealth of knowledge easily and effortlessly with you for FREE. Start your journey now to greater wealth through passive industrial real estate income and capital appreciation with one, or all, of these FREE offers:

  1. Download a FREE digital version of Lillie’s book The Money Factory NOW!
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