15 years ago, I would get up at 6am in the morning to go to work 5 days a week with often a half day of overtime at the weekend. Out of my modest earnings each month I would put a sum of money away in my bank account. I did this for a couple of years until…
I finally had a good look at one of my ISA statements after looking at the total amount I had saved from my years of hard graft. It didn’t seem like a lot, in fact the amount of money I put in had hardly grown beyond the amount I regularly invested each month.
Strange I thought, nothing much seems to be happening. I then received a statement from a loan I had taken out on camera equipment, I had been paying this off (or so I thought) for the best part of 12 months. Except here too the figure had remained virtually static.
So whilst I had been investing my hard earned cash in an ISA and paying off the loan each month, I was essentially losing money from both hands. I discovered on closer reading that the ISA was paying out a paltry 0.93% interest and this was with a major high street bank.
As far as the loan was concerned I had merely been paying off the interest at 29% APR.
This may have been a small amount of money but it taught me a valuable lesson. I decided to pay off the loan and take my money out of the ISA and use it to begin investing in property. Why?
Because I figured out that I could turn the tables on the banks by using their money get the returns I deserved by investing in property. After creating a profitable buy-to-let portfolio from these humble beginnings this strategy has more than paid dividends.
This of course wasn’t achieved by investing in just any property, my strategy was to find property that would not just pay for itself, but generate a growing income so that I could give up my day job.
Not all property markets provide these kinds of opportunities and many investors can get caught out by investing in a falling market, or one with a lack of tenant demand. The city of Atlanta in the US has no such problem, if I was starting out today Atlanta would be high on my list.
Atlanta is the number one rental market in the USA and the fourth most affordable, these statistics alone are enough to get me straight on a plane to buy.
Being the number one rental market means you can expect 14% net rental yields and being the most affordable means you can expect rock bottom prices. Compare this to money in the bank and that 0.9% return is beginning to look even less attractive compared to that 14% yield I could be getting.
Factor in property price rises of 6% per annum and growing rents and you will see that investing in Atlanta property provides you with a much broader return on that initial investment. A £40,000 entry level in the Atlanta market needn’t break the bank either.
Will you be investing your money in property rather than the bank this year? Please leave your comments below.