Do You Have a Sure Bet?

December 11, 2016 Sam Saggers

“Forget the lottery. Bet on yourself instead.” – Brian Koslow, self-help coach.

Essentially there are two main ways to become financially free.:

  • Receiving money through an inheritance, winning lottery ticket, insurance settlement, etc.
  • Saving and investing your capital wisely over time.

Of the two methods, can you imagine which one would be the most likely to provide lifelong benefits, both financially and personally?

Wait for something to happen

While it might be “easier” to simply be the beneficiary of a windfall, that doesn’t mean it’s the best choice.

Why?

One big reason is the lack of control. You have no say in winning the lottery nor can you choose whom your wealthy relative leaves their money to.

Make something happen

If, however, you wisely choose to build your own wealth using, for example, a strategy of investment property purchases combined with smart tax management you’ll be in control of much more than if you were simply handed money.

Of course, while you cannot entirely control the outcome when you buy an investment property, you can minimise your risk and make decisions that will improve your returns.

Getting started

Now that you’ve wisely decided that “making something happen” is the way to go, where do you begin?

Let me say from the outset that it will take time to learn about investing in property, but I promise that the time and effort you put into it will be well rewarded.

The following 5 steps are a good place to start.:

1. Learn how the property market works

Whether this is your first investment property or you own many properties, there is always something to learn about market dynamics.

Typically you’ll look at:

  • Population growth
  • Supply and demand
  • Yield variation
  • Infrastructure spend
  • Economics of the suburb
  • Demographics

Each of these market drivers work together to create a good environment for property values to rise and for rental returns to be strong.

2. Learn how to calculate rental yields

A positive cash flow property provides the capital you’ll need to buy your next…or first…investment property. A check of the gross rental yield will help you to quickly rule out properties that don’t fit your criteria.

Gross yield formula:

Weekly rent x weeks in the year = annual rent/purchase price x 100

Example: $500 pw x 52 weeks = $26,000/$450,000 x 100 = 5.7%

Note: A good guideline is to find an investment property with a yield better than 5%.

3. Learn what to look for in an investment property

Do you know what the local demographic wants and can afford? Find such a property, preferably one with a unique attribute that stands out from neighbouring homes and you’ve probably got a winning investment property opportunity.

Note: A good guideline is to find an investment property with a yield better than 5%.

4. Check your finances

Can you afford to buy an investment property?

You might be surprised…at Positive Real Estate we’ve helped thousands of everyday Australians, many of whom were on very modest incomes, become investment property owners.

It simply takes knowledge and having the right plan in place to create financial freedom for yourself and your family.

5. Connect with other investors

Buying your first investment property is a big decision. Improve your odds of getting it right the first time…and avoid a costly mistake (like the one I made on my first investment property) by connecting with other investors.

You can do so by joining our next Property Investor Night:

Do You Have a Sure Bet?

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