Creating Financial Independence
Each Financial cycle is between 7 and ten years long. During this cycle we experience four different phases, which I refer to as summer, fall, winter and spring. When you learn to work with these four different phases you equip yourself for great financial growth. I will describe below how to use these cycles to make huge profits from property.
The summer phase is the part of the cycle where things are really booming and no matter what you do, there always seems to be enough business to go around. Property prices are constantly rising, the banks are willing to offer 100 % bonds to anyone that approaches them and everyone thinks that property is the place to make unbelievable returns. Even your brother in law things he can become a property developer and it seems like nothing can go wrong.
This is a time for consolidation and profit taking, a time to be preparing for the inevitable “Fall” that is to follow. It is extremely naive to believe that the economy can just keep growing and that there will never be a correction or “fall”.
Our entire western economy is based on the incorrect premise that things just keep booming. This causes people to over react when the inevitable happens within the normal cycle of business and life and the boom or summer ends and we move into the next phase in the cycle. Where there is a correction and property prices begin to fall, banks refuse to lend money to anyone, 100 % bonds become impossible to obtain, those people that have tied all their assets up in overpriced properties and have no cash flow available, loose their shirts and your brother in law fails as a property developer.
When you understand how the cycles work and you learn to work with, rather than against these natural cycles, you empower yourself to make huge returns and set yourself up for financial independence.
The trick to using the cycles to your benefit is to firstly know that we live in a cyclical economy, and then go about the business of understanding how these cycles work and lastly accurately predicting when the seasons will change.
During the summer or boom times it is important to be thinking of the inevitable fall that is to follow and to prepare for this fall by selling when everyone else is buying. Thereby making massive profits off everyone that does not understand the four economic cycles. They are naively purchasing properties during the boom times that are extremely overpriced. You on the other hand are selling the properties that you bought during the winter phase for very little.
After the “Fall” where property prices have declined, we move into the winter phase where no one wants to touch property at all and prices decline even further. During this phase most property values fall below the value of the bond or mortgage and many people lose their homes.
The banks are extremely resistant to lend money and this forces property prices down even further. Now is the time to take those massive profits you have made selling your properties during the summer and to buy as many properties as possible.
This is the time to buy run down properties for a song and to invest into improving them, so that they are exemplary and very sought after when the next summer time comes along.
Next we move into the springtime, where things seem to be recovering and property prices have stabilized, banks are considering lending money again, but only to those buyers that are completely qualified.
This is once again a time for consolidation and bargain hunting. There are a number of really desperate sellers that are terrified that prices will drop further and they are willing to sell for any price. Seize every opportunity you can and build your inventory of properties as large as possible.
Next we move back into the boom or summer times once again, where property prices are increasing all the time and everyone is clamoring to buy properties. This is the time to watch the market very carefully and to sell your properties at hugely inflated prices, to those people that are clamoring to buy.
This is a seven to ten year process and if you follow my advice, I guarantee you that you can create financial independence for you and your family.
Author: Inspirational Speakers Andrew Horton