Property Smart Investments: How It Works

Robert Kiyosaki's financial wisdom underscores the importance of establishing a robust financial foundation with income-generating assets before considering investments like luxury homes. He encourages individuals to view their primary residence as a place to live rather than a traditional investment. The focus should be on cultivating multiple income streams through strategic investments, ultimately leading to financial independence.

One common misconception among investors is the belief that larger and more expensive properties inherently yield better returns. However, reality tells a different story. Overextending oneself financially can lead to unnecessary stress and increased interest payments. The smarter approach is to prioritize affordable properties as your investment, coupled with a strategy to repay your property swiftly, thus maximizing your returns.

A Smarter Way to Invest in Property

Imagine a more intelligent way to invest in property, one that starts small, pays off investments swiftly, and accumulates wealth while minimizing interest payments to the bank. It's a shift away from the traditional approach of investing in expensive properties solely because they are within financial reach.

There are several benefits to paying off your mortgage in a shorter period:

  1. Interest Savings: By accelerating your mortgage payments, you save a substantial amount of money on interest.
  2. Debt-Free Sooner: You achieve debt-free status more quickly, providing peace of mind and financial freedom.
  3. Equity Building: Rapid mortgage repayment leads to quicker equity buildup in your property.

According to the Bank of Namibia, the most common mortgage repayment period is 20 years, with many clients opting for the minimum required monthly payment. However, smart investments involve properties that can be comfortably paid off sooner rather than later. Clearing your mortgage within 5 to 10 years, for instance, results in significant savings compared to a 20-year loan.

Illustrating the Difference

Let's illustrate the difference between a 20-year mortgage and the Property Smart Investment approach:

The Default 20-Year Mortgage:

Imagine you invest in a property valued at N$5,000,000, with a 20-year mortgage at a 12.5% interest rate. Over these 20 years, you pay back the initial N$5,000,000 to the bank and an additional interest amount of N$8,633,686.60, totalling N$13,633,686.60.

20 Year Mortgage

The Property Smart Investment Method:

Now, consider purchasing ten properties over the next ten years, each valued at N$500,000. By saving the equivalent of your monthly mortgage payment for nine months, you accumulate N$504,000, enough to buy your first property. Continue this over ten years, and you'll own ten properties with a total capital investment of N$5,000,000, completely free of debt. You can then allocate your monthly repayment funds to further investments or diversify your portfolio with stocks, gold, and more.

By adopting this approach, you save N$8,633,686.60 and have the same investment in property after ten years, debt-free, compared to someone with a 20-year loan.

Property Smart Investment

Making It Work for You

Not everyone can purchase ten properties over ten years, but the principle remains the same: when investing in property with a bank loan, prioritize properties that can be paid off in a shorter timeframe, ideally within five years or less, compared to the conventional 20-year term.

For instance, consider purchasing a N$550,000 property that you can comfortably afford, resulting in a 20-year monthly repayment of N$6,248.77 and a total repayment of N$1,499,705.53. Now, redirect your monthly payment to N$12,373.87 for the next five years, paying a total of N$742,431.97 to the bank. This approach saves you N$757,273.57 in interest, funds you can allocate towards your next property or other investments.

20 Year Mortgage at N$6,248.77 per month 5 Year Mortgage at N$12,373.87 per month

In conclusion, the decision to pay off your mortgage in 20 years or a shorter period is a personal one, dependent on your unique financial circumstances and goals. If considering a rapid repayment plan, ensure you have a solid financial strategy and evaluate its impact on your cash flow and other investment options.

Where to Explore Property Smart Investments

  1. We're excited to present the secure and well-structured Otjomuise Community Lifestyle Estate, complete with 24-hour security. We currently have two-bedroom, one-bathroom units, with open-plan kitchen and living area, and convenient parking facilities. Remarkably, these units are priced at an unbeatable N$550,000 per unit. What's even more enticing is that they are already tenanted, generating a steady monthly rental income of ±N$5,000. For further information, contact Dickson Swanepoel at 085 588 6222 or visit this link for more details: Otjomuise Community Lifestyle Estate.
  2. For those with a more flexible budget looking to invest in a larger property, Hillcrest Court in Rocky Crest presents an attractive opportunity. Here, we offer spacious two-bedroom, one-bathroom units, with open-plan kitchen and living area with high ceilings, and convenient parking facilities available at N$850,000 per unit. These units are already tenanted, providing a steady monthly rental income of ±N$7,000. For further information, contact Dickson Swanepoel at 085 588 6222 or visit the following link for more details: Hillcrest Court.

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