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Almost always, without exception, beginning property investors need positive cash flow. They also need an increase in values to grow their portfolio.
There are many strategies investors can use to create wealth, however the learning curve on some of them can be a bit steep.
Rather than jump right into something like subdivision, wet your feet with the following strategies well suited to beginning property investors:
Buying property at a discount is a fantastic way for new investors to boost their portfolio.
Good negotiation skills combined with a well planned property investing strategy can net you some great deals.
To find a discount property start by looking for the “6 ds”:
It is possible to obtain a discount with a developer.
Possible reasons a developer would need to sell:
- Over-extended with his finance
- Needs to liquidate
- He is fiscally insolvent
Look for words such as “must sell”, “motivated seller” or “immediate possession” when looking for an opportunity to buy at a discount. These words indicate the vendor may be desperate to sell and thus very willing to negotiate.
Not everyone appreciates the potential of their own property. Look for a “diamond in the rough” whose owner is blind to the opportunities for profit that you can see clearly.
It’s not uncommon for heirs to be in a hurry to settle their parents’ estate – especially when the market is flat. To encourage buyers they may be willing to sell the property under market value so that they can quickly dispense with the property and receive their inheritance.
Banks can be a good source of discounted property. Banks are not property investors – they prefer to get rid of property, not hold onto it and maintain it.
Foreclosures can offer a great opportunity for new investors, but they can often need repairs that can eat into any potential profit so consider renovation costs when you make an offer.
An unfortunate event such as a divorce could prove beneficial to your bottom line. Often, the marital home is sold and the proceeds split between parties. As you can imagine, the more quickly the entire process can be done the better for the parties involved.
An add-value renovation can be as complex as the addition of a granny flat or as simple as sprucing up the backyard – if you understand your market and know what people want and are willing to pay for you’ll do well.
When looking for a renovation opportunity use the strategy known as “worst house, best street”. This means you’re going to find a great neighbourhood that has a property in need of some improvements.
Become well versed in the suburb you’re considering purchasing in. Study the:
- Development plans
Knowing these growth factors inside and out can help you quickly spot a great opportunity.
Limit your attention to only one to three suburbs which are similar in demographics, design and which are located near each other.
Find properties that have “good bones”. These are homes that need a bit of a touch up such as paint and carpet, landscaping help, fencing repairs, etc.
Look for out-dated fixtures that can be inexpensively replaced or modified to upgrade the home for a minimal outlay of cash.
Features that appeal to both homebuyers and tenants include:
- Open living floorplan
- Great lighting
- Smaller developments
Remember – when doing a feasibility analysis you want to gain $2.00 in profit for every $1.00 you spend.
No matter where you’re at on your property investing journey – whether you’re exploring, planning or doing – we’ve got the information you need to make the right choice for you.
Register for a Property Investor Night to learn more about buying discount properties (including great tips for negotiating your price) inexpensive ways to add value to your investment and much, much more.