The easiest way to buy a property is to borrow money. This allows you to have leverage. You would not even have the inner fear of additional debt. Property investments are positive assets because it helps generate passive income. Unlike getting a car, it will turn out to be a negative asset because the value of the car will eventually depreciate. These are the five reasons why you should borrow money for property investments.5 Reasons Why You Have To Borrow Money Click To Tweet
If you were to buy a property right now, you would not be able to hand in the money right away. Even if you save it up, it is going to take years. Looking at the price of the property, it will not remain the same. The price is definitely going to increase by the years and time. If you borrow money from the bank, 90% of the loan is more likely to be given to you. You will only have to top up 10% of the remaining amount.
You will be able to do more with less resources. Leverage allows you to buy properties wihout using your own money. Assuming if the price of the property increases by 10%, you gain profit. If you use your own money, you will only get 10% of the money that you put in.
If you pay cash with rental income, there will not be any tax on rental. If you borrow money, the interest tend to get deducted as well. The more you pay to the bank, the less you pay to the government.
Inflation Is A Good Thing
Inflation allows you to take money off the bank. If the interest rate is 5% and the inflation rate is 5%, you need not pay additional interest than the amount you borrowed. Let’s say that the inflation rate is more than 5%, you actually make money!
Increasing Net Worth Faster
Net worth is the difference between assets and liabilities. If you borrowed money, the net worth increases a few times more than using money. Buying assets increases value over time. This will help increase the worth of assets and net worth. You will be able to buy more properties in a short period of time.