Furthermore if I have a loan on my own home all the repayments come out of my income. As for the investment property the majority of repayments are paid for by the tenant, I only need to contribute any difference between the rental income and the loan repayments, rates and insurance. This difference is very affordable for most income earners, so to pick up a substantial income from the sale of the home 5 to 10 years later is a big advantage. In my experience, I have found that a good home in the right location will increase an average of 8 to 10% per year, so a $500,000 property will increase an average of $50,000 per year over 10 years, this equates to $500,000 increase that you receive in one lump sum. Therefore if you have 10 properties, that is a $5 million gain.

Yes building wealth as it’s called these days does take time, and it does have its ups and downs as you saw with my 1st experience. My best formula was to treat each home like its own little pop up shop. Make sure it is in the right location, the right return, the right property manager, and etcetera. Basically so it is self-sufficient, and I only need to check it is running smoothly from time to time or jump in if there is a major problem to sort out, but still keeping my eye on the ball so to speak.

I must point out that selling the home 10 years later is not always the best option either, as when you sell it you will need to pay the tax so check with your accountant to see the best way to be tax efficient. I have always preferred to keep the home and refinance to take out the growth or equity in the home, to reinvest into other homes or simply spend on life’s little luxuries.

Investing in a rental property can be an excellent decision if you go into it informed. Consider these words from Donald Trump: "It's tangible. It's solid. It's beautiful. It's artistic … I just love real estate."

My Tips and common sense on :Rental Properties

Tenants gain many rights as soon as they take possession of the property. Evictions are slow and costly; most can be avoided by doing the work before the lease gets signed.

Have the Property Inspected - One of the best ways to avoid unexpected expenses is to have the property inspected every 3 months.

Research rents in the local area to understand fair prices, and don’t rush to raise the rent every year if you have a good, stable tenant

Maintenance problems need to be fixed quickly. Not only will it keep tenants onside, but also reduce the risk of legal problems if something goes wrong because you were slack responding to maintenance requests.

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