How to Develop a Property Investing Wealth Mindset

 

If you’re interested in finding out how property investing can help you to accumulate wealth, first ask yourself whether you have the right mindset to succeed in property investing. Robert Kiyosaki – author of Rich Dad, Poor Dad – once said: “The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant.”

So, whether your goal is to achieve financial freedom or to level up in life, think of a wealth mindset as a switch you have to turn on before entering the field of property investing. This involves changing your way of thinking from the negative to the positive and embracing an abundance instead of scarcity mindset.

To develop a property investing wealth mindset, there are key lessons we can learn from how the rich think and the habits they adopt that sets them apart.

1. Pay yourself first

To start saving to invest, get into the habit of “paying yourself first”. What does this mean? Each month, when you receive your salary, the first thing you do is set aside a portion of your income into a separate account for long-term investment. Do this even before you pay for your living expenses or bills (e.g., groceries, utilities, transport) and before other discretionary spending (e.g., online retail therapy, entertainment).

Why do this? This forced savings habit ensures that you have a sum set aside for investment, your retirement nest egg or even a rainy day. At the same time, it ensures that you do not spend beyond your means. It helps you to stay on track to grow your positive net worth and will help to fund investment choices down the road – whether it’s in property, mutual funds or starting a business.

2. Invest in cash-generating assets

Successful investors with a wealth mindset are always on the prowl for suitable opportunities to generate wealth. The difference between these investors and other folks? They actually take action to invest in cash-producing assets whether it’s over the short or long term! That way, they can make “make money while you sleep”. After all, why leave your money in a savings account which attracts low interest?

Investors who understand this believe in acquiring assets that can generate multiple income streams and also have the potential to increase in value over time. This puts money into your pocket. On the other hand, liabilities take money out of your pocket. So, it’s quite clear which one you should be focusing on.

 We’ve talked about positive cash flow before. A common cash-generating asset is property. Investing in real estate– whether it’s residential property, industrial property or commercial property – has the potential to provide you with a steady stream of passive income in the form of rental income.

3. Use good debt

Some people have the notion that all debt is bad. This is a common fallacy. Your mindset shapes the way you view debt. Successful investors with a wealth mindset recognise that there are two kinds of debt: the good and the bad. Good debt can be used to increase your net worth, if you know how to leverage it properly. Bad debt is used to buy depreciating assets which do not add value and which is used for consumption – you won’t get any return for this.

So good debt is money that you borrow to invest with the goal of being able to get a return out of it. This could mean taking out a loan to purchase an industrial property for investment, for example, so that you can lease it out for rental income – the positive cash flow from this is money which you can put in your pocket. The mortgage for your residential property is also another example – if the value of your property increases over time, you can chalk up capital gains if you sell your property.

Of course, in order to utilise good debt, you need to make sure that your finances are all in order, the income-producing asset is able to cover the loan and interest for the debt, and that risks are managed adequately. Make sure you do your sums.

 4. Take action

What differentiates the wealthy from others is that there is that hunger to make it. Those with a wealth mindset will grasp every opportunity they have to make money. They will pour their mind and soul into searching, evaluating and seizing opportunities. In short, they are not afraid to take action.

What does this mean from a property investor’s perspective? If you really want to embark on your property investment journey, then you need to take action. Learn all you can about the property market, speak to people, read up on market trends, do your research, attend property workshops.

Most important of all, you need to “pound the pavement”. Go out there to visit sites, look around the vicinity and find out what amenities are available around the area. First-hand knowledge and seeing things with your own eyes will help you to identify which properties are suitable for investment.