Many people believe the key to creating wealth is by working hard….but unfortunately, hard work doesn’t work. Most people are on a treadmill, trading hours for dollars. They work hard and get paid by the hour, but there are only so many hours you can work and only so many dollars you can earn per hour.

Then comes the realisation that working hard is not on its own going to get you to the “pot of gold”. You figure out that investing in property is a great vehicle to get you there. You get some education, attend seminars and gain the knowledge, you need to start your investing…..and away you go.

There is one other area that I believe is a crucial link in the success chain that unfortunately is not normally taken into account much and is much underrated. ……it is your MINDSET.

One of the most important steps you can take along your road to wealth creation is a change in your mindset, in your thinking and followed through in your actions. You should strive to become financially successful in your state of mind and thoughts before you achieve it in reality.

In this article, I would like to touch on three of the most common mindset beliefs that seem to hold back investors and inhibit the progress they could be made in building up their property portfolios.

1) I don’t feel comfortable going into more debt.

Most people are scared of debt. Many of us have been taught to think this way by our parents.

We were told as children not to buy things we cannot pay cash for. We have also been taught not to borrow excessively.

On the other hand, the smart investor realises that they can become very wealthy by owning assets that increase in value – appreciating assets such as real estate.

They recognize that to grow a large property portfolio they must borrow debt. They see this as good debt and borrow as much as they can to own the largest property portfolio they can safely service.

The key is to build up your asset base as quickly as possible using other people’s money. This ensures you can participate in gaining much more capital growth than if you waited until you assiduously saved your own money to buy your investment outright.

Good debt is your friend…..the Poor decrease their Debt while the Rich increase their Debt.

2) I’m better off paying off my own house mortgage first.

Our parents instilled into our head that you must pay off the mortgage on your home as quickly as possible.  One of the aims here is to reduce their “bad debt” as many see their home loan as bad debt since it is not tax deductible.

Perhaps a simple change of mindset from thinking your home loan is bad debt to thinking it is not really bad debt – more like necessary debt, can help you see this loan in a different light.

Instead of striving to pay off their own home loan, smart investors know that it is greatly more beneficial to pay off the minimum they can in repayments, or even borrow using an interest-only loan rather than a principle and interest loan. They realise it is a flawed investment strategy to put all their money into paying off their home loan and wisely use their excess funds to buy more appreciating assets. They use this money to invest in properties that will increase in value and create wealth for them.

3) I need to sell my properties to make a profit

The ill-informed like to try to make money through buying and selling their investment properties.

When the value of their property increases they are inclined to sell their property to take a profit (and pay off their loan ….as mentioned above).

However, the smart investor understands that by holding onto their assets they will make more money in capital gains. They rarely ever sell any of their properties. They know they can refinance against the appreciating value of their properties.

The great thing about real estate is you can borrow against the increase in value and use this money as a deposit for further investments. After a few properties, the process can become self-fulfilling.

This is why we love real estate…..with real estate you don’t need to sell your properties to realize your profits.

In summary, take the time to review your beliefs about how property relates to things like debt, risk, growth, asset appreciation, wealth creation, etc. You may discover that a simple change in your MINDSET opens up a whole different view for you.

A positive change of attitude to aspects that were holding you back due to old beliefs can reignite and rejuvenate your investment and wealth accumulation strategy.