Replacing earned income with passive income is a goal that many investors aspire to, whether it be through property, shares or operating a business. It all sounds good in theory – but if you want to create an ongoing income through real estate rents, how do you go about achieving this?

Ian Hosking Richards, an experienced investor with more than 50 properties in his portfolio, is founder and director of Rocket Property Group. He says the first step to success in this regard is adopting the right mindset.

“Over the past 20 years I have spoken with many hundreds of investors, and the most successful ones are often not the ones who started with the most, but those who were the most determined,” he shares.

“Success is really more about your resourcefulness and your intentions than your resources.”

The important thing to remember is, he adds, it is not that important to know exactly how you are going to achieve your financial goal – the most important thing is to have faith that you will achieve your goal, and to expect success.

“Leverage is the key to creating wealth. The more leverage you have, the more wealth you can create. It is as simple as that,” Hosking Richards explains

“Property is such a great wealth creation asset class because it gives you much more leverage than other asset classes. If you have a 10% deposit, you can borrow the other 90%. You can even borrow the 10% deposit plus buying costs if you have equity in existing property.”

Your borrowing capacity, combined with your willingness to take on good debt, will be key to achieving your financial goals. If you purchase a property that is self-funding from day one, all of the equity growth is yours, without any of the holding costs.

So, what is the catch?

“Rather than a catch, let’s call it an obstacle to overcome. The reality is that if you are highly leveraged, you are inevitably taking on significant debt,” he says.

Debt doesn’t have to be a challenge – in fact, when leveraged correctly, it can form the building blocks of your wealth creation journey.

Learn more, including the steps you can take to replace your income through property investing, in the November 2019 edition of Your Investment Property magazine.

On sale at news-agents and Coles, from the 26th September to 31st October 2019

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