How do you make money in property investment?
You buy a house, put tenants in and watch as the cash starts to roll in…
Sounds simple right?
If only it was that easy…..
Most of the success of any property investor comes first from conquering their fear. You see….. Most people don’t get past having one investment property if any at all. If you’ve got three or more you have bettered the majority and are on your way to giving yourself every opportunity of retiring with some degree of wealth……
So how do you get started with property development? Ask yourself these five questions:
The first step is to understand why you are getting involved in property investment.
Do you plan to sell the property for a quick profit?
Are you planning to hold on the property long term for capital growth and rentals returns?
Don’t do anything until you are clear on the strategy. Whatever the case, just be clear on why you are buying an investment property and what your strategy is.
Ideally, look for a property that has development potential. It may even be the one you are living in now. If the block is big enough that it can be subdivided or split into two separate lots, that can be a good opportunity to manufacture ‘equity’ ; otherwise known as cash dollars in your house.
Alternatively, within Brisbane and Logan Council area’s, with a block of 600m2 or more you would be able to build (and/or rent out) a new house on the block next to the existing one. This gives you a dual income property plus you save good money by paying only one set of rates. These dual income properties are particularly attractive to new investors as they are often cash flow positive investments.
When is the best time to invest?
There is no specific day, week, season or year to invest. The best time is when YOU are ready. You have conquered your fear, decided on your strategy and done your research. Your finance is in place and you are ready for the commitment & sacrifice required to manage your new investment.
That’s for you to decide. Where do you feel most comfortable investing? For most new investors, this is normally within a 30km radius of their existing home or an area with which they are very familiar. More seasoned investors might venture out of town or out of state, but for new guys, look within in an area you are comfortable with.
You should have a finance pre-approval in place so that you understand your limits, as well as having the reassurance that you can complete the purchase and/or development costs.
Also, understand in which entity you will purchase in.
Will it be in your own name, in a company, a trust or maybe you’ll be involved in a joint venture?
Seek your accountant’s input to help you decide and your bank will also have some impact as they may be willing to lend under one entity but not under another.