The most valuable asset you have is time.
How do you want to invest the precious amount of time that you have?
Would you rather make wonderful memories with your loved ones or sit through endless work meetings about things, which you have no interest in?
Would you rather be present when your child takes their first steps or absent, whilst you attend a performance review at work?
Would you rather spend your winters, soaking up the sunshine on foreign shores, with a cold drink in your hand, or huddled under an umbrella on your way to the office?
I’m no genius but I think I can guess your answers.
At this point, I invite you to close your eyes, take a deep breath and consider whether you’re in control of your life currently?
What does control mean to you?
In this context, control is about having the freedom to make your own decisions.
Would you rather spend your days in an office or making new memories with your family?
Would you rather spend your winters in a cold country or a warm country?
Would you rather send your children to a good school or an outstanding school?
Would you rather your loved ones received good healthcare or outstanding healthcare?
Take a moment to reflect on these questions and consider how much freedom you currently have, when it comes to making these kinds of decisions.
Now ask yourself, whether you’d like more freedom to decide how you invest your time.
If the answer is yes, you’ve come to the right place.
In many ways, the education system in the UK is excellent. Arguably the best in the world.
In some ways however, it is profoundly flawed.
From a very young age, you have been encouraged to work hard, so you can get the best grades and move up to the next level.
Towards the end of your school days, you were encouraged to gain entrance to a top university.
During your university years, you were encouraged to secure a safe job in a large company with great benefits and opportunities for career progression.
During your career, you are encouraged to work hard, so you can secure promotions, which will empower you to earn enough money to buy your own home.
You’ve done everything you’ve been taught and yet you find yourself reading a book about property investment?
Why do you think that is?
It’s because our education system is excellent at producing employees, who gradually rise through the ranks of established companies, whilst having their income tax contributions automatically deducted from their paychecks.
If you’re looking for job security and a relatively low-risk way of owning your own property, this is not a bad path to follow.
If you’re looking to build generational wealth and enjoy a life by design, in which you’re free to choose how you invest your time, you need to forget everything you’ve been taught, open your mind and be prepared to think and act, in a very different way.
The title of this section is a tribute to Napoleon Hill, who authored the classic book with the same name.
It is essential reading for anyone wishing to become truly wealthy.
Wealth is created in your mind.
If you decide that you’re going to become financially independent and live life on your own terms, you will.
If you decide to continue as you are and remain on the road of perceived safety, nothing will change.
This is your life and you’re in control of what happens.
If you’re committed to making a change, you should start by changing the way you think about money.
Traditionally, you have worked hard for money. It’s time for money to start working hard for you.
Once you understand how to invest in property, your money will start working extremely hard for you.
Depending on the types of property that you invest in and the way you structure your deals, your money will be working in two key ways.
On account of market forces, particularly supply and demand, the long term trend of property prices in the UK is upwards.
This means that if you buy a property and hold it for the long term, you will benefit from the property being worth more, in let’s say 10 years time, than it is today.
Imagine a scenario in which you buy a property for £500,000 and it’s worth £620,000 in 5 years time.
Averaged out over the 5 year period, this equates to you generating £24,000 of profit each year or £2,000 per month.
Now let’s assume you spend an average of 4 hours a month managing that property.
By making £2,000 per month, in exchange for 4 hours of work, you are making £500 per hour.
Now let’s assume you’re earning £60,000 per year from your corporate job.
That equates to £5,000 per month.
Now let’s assume that £1,500 gets deducted from your payslip to cover your income tax and national insurance contributions, you’re left with £3,500 per month.
By making £3,500 per month, in exchange for, let’s say 160 hours of work, you are making £22 per hour.
What sounds more attractive to you?
An hourly rate of £500 or £22?
We’ll cover tax efficiency later but keep in mind that your capital profits are only subject to taxation if you realise them.
NB: There is no guarantee that property prices will increase and you should be prepared for them to decrease. That being said, the long term trend is upward and in addition to capital growth, you can and should, also engineer your own growth by adding value to the properties you acquire. This will also be covered in more detail later.
In addition to capital growth, if you structure your deals effectively, you will also benefit from receiving residual income on a monthly basis.
Let’s say you buy a property for £500,000, which costs you £2,500 to operate, on account of paying your mortgage and bills.
Now let’s say you’re able to rent that property to a group of tenants for £4,000 per month.
That leaves you with £1,500 per month, every month for as long as you own the property.
By making £1,500 per month, in exchange for, let’s say 4 hours of work, you are making £375 per hour.
The hourly rate you’re generating from one property is approximately 17 times greater than a corporate job, which pays £60,000 per year.
Once again, we will cover tax efficiency later but if you were to buy this property through a new or existing company, you will have the opportunity to offset or reinvest your profits, so as to defer any tax, which is payable on your gains.
Whilst there is absolutely nothing wrong with salaried employment, particularly if you love your job, it is important to understand the restriction it places upon you, both in terms of how you invest in your time and how you manage your taxes.
In order to gradually build a life of your own design, in which you’re free to decide how to invest your time, I would encourage you to open your mind and embrace a new way of thinking about money.
By investing in property, you can generate additional streams of income, on both a capital and residual basis, at an average hourly rate that is 15 to 20 times higher than most full time jobs.
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