Leveraging on property to generate passive income

As the saying goes, “Investing in real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy”. The question is - HOW?

Financial leverage - using borrowed capital - is one of the most effective ways to generate funds for investment purposes. This allows investors to invest in a large asset, and increase the potential return on the investment.

Upon property investment, there are 2 viable ways to earn income:

1. Buy to Sell -  which means buying at a certain price, and quickly selling at a higher price to

make a quick profit in a short period of time.

2. Buy to Rent -  collecting rent as a form of passive income. This is the best way to gain an

additional source of earnings, attain security in retirement, and ultimately achieve financial

freedom. 

Out of these, the most popular way to generate real estate passive income is through rental. With rentals, investors get to hold onto the capital gain, and benefit from property appreciation while leasing out their property as a substantial passive income stream.

Investing in real estate allows homeowners to leverage on their mortgage, while using the subsequent rental income to pay for the repayments. The idea of leveraging real estate is to increase returns by using other people’s money first, to buy a property. 

Let us share a genuine case study:

We met Mr and Mrs Percy many years ago at an invited dinner with some close friends.  

As the night passed, the topic turned towards raising & channeling passive income. Mr Percy was shocked and amazed at how they could potentially generate a stream of passive income to attain security in retirement, and most importantly, achieve financial freedom.

Mrs Percy was reluctant to sell, as this was their matrimonial home and had sentimental memories. After looking at the calculations, they were thoroughly convinced and pleased at the possibility of a $0 cash top-up, and even additional cash to invest in a second condo for wealth creation. 

Mr and Mrs Percy have done extremely well for themselves since. They were able to sell their previous property and retire in a fully-paid 4-room HDB flat. They were even able to purchase a private condo under their daughter’s name, and rent it out as passive income.

Real estate has proven to be a great investment opportunity for investors and homebuyers. It opens up a number of passive income streams, allowing investors to reach financial goals without trading their time for income. 

Are you looking for a stable method in building financial freedom? We are Pamela & Shirely from Wonderhomes.sg! Click comment below or drop us a PM & we will get back to you soonest!