Real property is an asset class that can be used to create wealth in any market conditions.  This is because it is uniquely placed to obtain the best possible leverage of all asset types.  Banks and other lenders will usually provide finance for the purchase of real property to the maximum loan to value ratio and unlike other asset classes will not call on the borrower to repay principal in large sums (margin calls) if the value of the asset declines.  The reason for this is that the value of real property rarely falls below the original purchase price and even if the property does fall in value this is usually a short term economic condition that resolves itself and positions the property for significant growth in the long term.

Many people attempt to make large capital gains in the property market by trying to time their entry and exit.  However, this strategy is fundamentally flawed and may result in losses rather than gains.  The reason for this is that although property usually follows continuous cycles of growth, unforeseen economic, political and even weather conditions may temporarily affect the market with little or even no warning. 

The best strategy for growing wealth with property is ‘time in the market’ rather than ‘timing’ of the market.  What this means is that you should take a long term view of your investment and use the capital growth that you achieve to continuously increase your asset base until you are ready for retirement.  In other words, don’t sell your golden goose or the eggs it lays until you have achieved the level of retirement capital you need.

With this strategy, it does not matter what happens with interest rates provided you plan your acquisitions carefully with due diligence and manage your cash flow.  If interest rates are low, this often presents the opportunity to buy more property as affordability is adjusted accordingly.  If interest rates go up, then chances are that your existing property values have also increased providing you with yet another opportunity to increase your asset holdings as you loan to value ratio would have improved.

Investors should invest in regions that are uniquely placed to offer premium growth potential. They should review history to identify whether the growth will continue in the future.  This data needs to reveal consistent population and economic growth that will continue to sustain expected returns into the future.

As with any worthwhile goal, the more that you learn and apply yourself to the positive and pro-active pursuit of your property wealth, the more adept and prosperous you will become.

With knowledge and a sound strategy you can minimise risk and maximise your wealth.