How To Make Money With Your Investment Property
Are you hoping to make money from a property you own?
Keep reading to learn how to make money with your investment property in Australia.
If you own your own home, you have an investment property–whether you think of it that way or not. The first step in getting the most out of your investment property is knowing what you have.
The second step is deciding what you’ll do with it. If you decide right, you’ll be on your way to financial independence.
Any property is an investment property, including your primary residence. All someone needs is a decent credit score and some capital and, voila, loan approval. Then the keys are in your pocket.
Now, most people stop right there. This has been the Australian Dream, However time have changed. Most people are content to have a place to live. Others are not. Some people want to take that first house and find a way to make money from it.
Why? To eventually gain financial independence. Own enough properties, manage them well, and that will become your income.
Goodbye office job. Goodbye working in the hot sun.
You can get going in one of two ways: either rent the property or rely on capital growth. Not all rental properties are “positive cash flow properties.” so you also need to rely on capital growth.
If you aren’t ready to move out of your home–which, after all, is your investment property–but still want to rent a portion of it, consider letting one room. If you have a “granny flat,” even better. Your money will grow fast and you’ll be on your way to investing in another property.
There are many factors to renting out property. And understanding them all will give you the best chance at having a successful investment portfolio. There are many tax laws that are there to help you. Engaging a good independent broker and accountant will make a huge difference.
If your property is large enough, consider taking the money from renting, and building a guest cottage that you will also rent out.
How many properties would you need in order to gain financial independence? Find out here at the Financial Freedom Workshop It might not be as many as you think.
Buy low, sell high, right?
If you’ve owned your investment property (aka first home) for a while, you have seen its worth fluctuate–but even within the fluctuations, it’s typically on the rise. You also know that when you make improvements like updating the kitchen, adding a deck, or repaving the driveway, you increase its value. If it is done right.
Guess what? Between capital growth and your improvements, you can sell your investment property for a lot more than you paid for it. Profit!
Both: Why not rent out the property for a while, use that money to pay off your mortgage, then take all the profit when you sell the home at a higher price than you paid for it?
You surely already know this, but a lot of people are migrating to Australia. So many, in fact, that we don’t have enough homes for them.
Though the odds are in your favour, do research any area you’re thinking of buying your investment property in. Not all regions of Australia are created equal.
For instance, Sydney and Melbourne are heavily saturated right now, so a hot alternative is Brisbane area. But at the time of writing this article, there is a flooded market with units. Houses are definitely the way forward. Some are predicting an uptick in tourism in Brisbane in the near future, so tourists will need lodging.
How about Cairns? That’s a fairly typical starting place for tourists who are visiting the Great Barrier Reef. Where there are tourists, there are tourism employees–everyone needs a place to sleep… why shouldn’t they sleep at your investment property?
The Sunshine Coast went through a rough patch, but it’s well on its way to being fully and newly developed–that means a lot of families or development employees looking for a place to live. Once they’ve finished the work, they’ll move on–probably–and others will be ready to take full advantage of the great projects they’ve left behind.
However, before you decide on a region, as stated above, you’ve got to research. How fast do you want to make money? How much risk do you want to take? Do you have enough time to employ the strategy your using? How much money do you have available at the time you buy? How long do you want to wait before you sell?
most of us do not know the answers to these questions, that is why i rely on REIA for my research and professional advise on where to invest.
Also, if your investment property is in a capital city, based on recent history, you’re likely to make more money than if you invest in a non-capital city.
You’ll need to find a place that fits the bill for you.
Anything I’ve ever read about property investment says that time is a property investor’s best friend. That means start today and hang onto it for as long as you’d like–usually the longer the better.
Lending institutions know that time is on your side, also. Lenders are willing to shell out as much as 80 or 90% of what you need because they know that for the past 25 years at least, property has been an investment with a solid return.
Of course, to start now, you’ll need a strategy. Each strategy is related in some way to either renting or capital growth of your investment property.
If you choose to flip houses (buy a shabby one, fix it up, sell/rent it), that works for either approach. You’ll definitely sell it for a lot more than you bought it, or you can neatly rent it out until you’ve paid down your investment, then sell it.
You can renovate and hang onto it until you know the value rises.
Or, you can buy a brand new house and hang onto it until its value rises, then resell it in perfect condition for a lot more.
Don’t Go it Alone
If you’re like me, working your way out of cluelessness a lot of the time, taking advice from your family and friends, you should know that the smartest way to approach a new endeavour is by asking for professional help.
I wouldn’t have guessed it (that’s the clueless part), but there are people who work as professional guides who can tell you how to gain financial freedom through managing investment properties.
Another benefit of having help is that you won’t have to navigate the Australian tax system on your own.
However, you decide to begin, have a plan and stick with it–you won’t gain financial independence over night.
A professional can help you develop a plan, or you can try to go it alone (others have succeeded!).
But listen, foreign buyers are crazy about the Australian housing market. Let’s not allow them to be the only ones who profit from our land.