What is the leverage effect when my property doubles in seven to ten years?
Lets look at a simplistic arithmetic without factoring in present values, compounding etc). If you put in a deposit of $60,000 to invest in a $300,000 property , borrowing approx 80% from the bank. And the property doubles to $600,000 in ten years time – you have generated capital growth or wealth of $540,000( being $600,000 less $60,000) over ten years. This is done with $60,000 initial outlay plus regular instalments generating $54,000 a year in increased wealth before discounting for inflation etc. If you have not started , you may not have any equity to look at in Year 10.
Start now. And a beautiful quote :
“took 22 years of slow and steady building – block by block – before the world received a gift called The Taj Mahal. And all wonders are like that – they take time. Lots of hard work. And time. We live in a miracle drug world. We all want what we want – and we want it fast. But great companies/relationships/lives are built over time. Small daily steps, over years, lead to stunning results.” — Robin Sharma