Monday, 12 October 2015

Real Estate Baby Steps

I've mentioned before the beginnings of my love of real estate, but you're probably assuming I just wanted a property or five to rent out for the income. Or even that I wanted MORE income by renting for short-term lets, which pay better. I do. But I'm still not content with that. Add another adjective to the description of me: not just smart and lazy, but also greedy.

Where we are right now is in our first year of owning an apartment which we rent out to tourists. It took me about a year of research, sweat and tears and sub-letting on AirBnB, to gather the evidence and experience to get my husband on board. Which is understandable, because my approach is unorthodox, and as I've noted before, 99% of people go through life in the conventional way: get an education, get a job, work hard, take out a normal mortgage, buy a normal car on finance, commute for 40 years, retire with the house paid off but not much more, do all of this while spending every spare cent and being a slave to the grind of the working week.

I did a lot of reading in the lead-up to buying, and came to love real estate as a subject in general. Specifically, if it's done in the right way, it's one of the best (almost) passive income sources around. (What's passive income? It's money you earn while not doing anything at all.) Sitting around getting rich with little effort sounds like heaven to me.

I've mentioned before that I don't actually need to be rich (I just joke about it a lot) but it is absolutely no joke that if anyone can earn money without effort, then it will be ME who figures out how or dies trying. There is no end to how many hours I could spend daydreaming on these things. Ahem. Anyway, passive income. Seems to me that many ordinary families invest in ordinary real estate for the ordinary rental income. That's a drop in the ocean and a daydreamer like me dreams far bigger than "ordinary". Rental's not enough, AirBnB's not enough. The serious money in real estate is in the capital gain. In simple terms this is the value of the property going up over time.

Every country has different laws in terms of taxes and income for property, but (amazingly) in many places you can earn more money by buying a modest property and sitting on it and doing nothing, than by working and saving and saving some more. The difficulty is that most of us don't have spare money lying around to buy a place and can't afford to pay the bills for 20 years while the value increases. The tourist lets were how I got around that part, by proving it could pay its own way and make the borrowing worthwhile while we wait.

My second big joke is that it's only the beginning of my tycoon career. I say that, and people laugh, because one tiny apartment does not a "tycoon" make. But it's part of my bigger picture, and in my mind's eye there will be more of them later on, you see. :)

(Husband is not keen on the idea of buying another one. But I've dealt with the "I'm not keen" thing before. Leave it with me, I'll get back to you one day.)