Hi all,
How are you? last time I posted about 4% to the financial freedom and a lot of people replied to the stories , asking for more strategies. So this time I would like to share with you the house I own in Japan.
!
They look super nice, isn't it?
BUT EVERYONE CAN DO IT TOO
This is a studio flat which worth about 100k when I bought it, the key is to use your financial leverage.
What is financial leverage
In the current low interest environment, bank is very happy to borrow you a lot of money with extremely low interest rate. The idea is to borrow the money with low interest rate and then use that money to buy an asset that generate high cash flow.
I basically remortgage my property and borrow 100k from my bank at interest rate of about 2% for 30 years
This means about 370 USD per month that you need to pay back to the bank and the idea is to find something that generate more than 370 dollars per month, so that you can pay the mortgage together that you can save extra money.
The studio I bought in Japan Shinjuku, generate about 6% net per year which is around 500 dollar.
To sum up, I borrow 100K from bank, I pay back them 370 per month and get back rent 500 per month
So basically I pay nothing and earn 130 positive cash flow every month!!
Is it that Easy
If you want to know more about how to reach financial freedom, Follow me on Steemit!!!
To get financial freedom, you need patience, persistance, hardwork and tolerance. Its not really easy to be rich. Neither is it easy to be poor. Both are hard to attain. So choose wisely
Thanks. Agree completely. Whatever investment we engage in, the wise thing is to evaluate what you have, how much you can afford to lose, what is the volatility of that asset and then place your bet accordingly.
4% to the financial freedom! How old are you now? It is so amazing! Put do you afraid that some additional charge or not people rent your house someday? For me, I think that it is a very risky investment. Financial leverage is a useful concept. But I am afraid that only 130 USD per month cannot cover some accident cost for the japanese housing...
I am in my early 30s :) It always about understand how much you have and how much you are able to lose. For example, if you have 100, would you mind to risk 1 dollar on investment. Maybe yes, Maybe No. I will discuss more on this aspect shortly :)
can i get a loan for flat, if im russian citizen?
Thank you for your comment. I am sure you can as the current situation now is that bank has too many money and the demand for the money is too little. I will share some tips of how you can deal with bank and get better offer in the process. Follow me and stay tune!
Interesting and educational!
Thank you for your comment, I am so glad that you like it. Follow my blog and I will reveal more technique to reach financial freedom!
I liked your content; it is interesting. Will follow you.
Thank you
Thanks tammy, already follow you back, hope you have fun reading and have a good day,
good article, followed
thank you, follow you back aaron, hope you like to story and have a good day.
This is exactly how you should do it! Not only that but try and find the best places in terms of rent, and make a ratio of: Rent/(apt cost + rates + interest), and what ever gives the highest ratio should be purchased as this will give you the best relative rate of return. Another note: Purchasing 1 property is rather minuscule, instead you should (if possible) Purchase multiple and leverage the mortgages against each other and use the rents to combine and pay off them selves, this gives a larger rate of return, and when the break point occurs (Mortgage paid off) You will be left with a larger asset pool.
followed you locikll, tell me about it, let exchange more of this topics later. I also want to learn as many as possible!
Thanks mate, Yeah I definitely can mate its fairly simple stuff albeit some math required :P
Seems very legit to me.
CCan you tell us more about the potential risks involved?
No offense, man. But it isn't that easy. Where did you get the loan from? Not a Japanese bank (unless you're Japanese). The laws in Japan are super anti-foreigners especially for purchasing real estate.
Great point, obviously you have explored that route too. And you are right, i secure my loan in hk, and convert that into jpy so there is a foreign exchange market risk on the investment. But i just try to demonstrate a point about leverage, not necessary you need to buy house in japan. I will write more on that , thank you