Making money through real estate is easy. Indeed it takes a bit of time, but quite promising.
Don’t get me wrong; not everybody can make serious money through this Real Estate channel if we follow the crowd.
First, try to avoid asking for advice from those who can not truly help you build wealth through real estate investment.
There are many stories about wealthy people that are very smart with businesses. For example, people that make a fortune from selling education books and fill up 5000 people in a room every weekend training, or people that run real estate investment companies that sell 100 properties every month which is billions of dollars in revenue.
Most of them make money from selling real estate and tend to increase your emotions with very good stories, dreams and their own wealth credibility and success stories, however not many, in fact, close to zero help us with the investment aspect to understand how to make money from the right purchase and from the overall portfolio.
Wealth stories are vital as no one reaches to million-dollar income from doing nothing. You have to be very persistence over the long run to tap into the multi-million dollar cash flow.
Fulfil a significant wealth through a successful business is the same with real estate. You build your portfolio slowly with your yearly position and hold it for the long term, not many can do it, and the proof is that 95% of us sell our investments within the first two years and never establish a good portfolio and net asset base. Only 2-5% property investors succeed, and this is the reason we have to be very focused and persistence in our journey, but again don’t confuse between a positivity, perseverance and long term focus with very average actions and advice from those who made money through other channels.
Recently, I wrote about some misconceptions and false promises of sellers. Here are a few:
- Long term focus
- 5% gross rental yield focus
- Tax offset focus
- The Australian cycle with the trendy property clock focus
- Any asset class that close to the CBD focus
So here are WHAT you need to Do To Make Money from Real Estate.
- Always take independent advice. Always ask what the interest of the seller or the buyer is.
- Understand that healthy capital growth is by far stronger than a few dollars more in rent. If you buy well, and grow the property yearly, rental income will follow and vice versa. If you buy the wrong property with the wrong risk, the rent might be higher but will stay the same for the long run, vacancy rate might be very high, or a bad tenant might occupy the property which will eat your profit.
- Try to avoid getting into the cherry on top of the cupcake deals. Tax, for example, is a small portion of the real estate deal. Yes, if this is a good buy, the tax return on top of that would be significant. NRAS was also a cherry, negative gearing that turns into positive cash. However, it is not a smart idea at all if you buy low to negative performance apartment that will not grow at all in the next 15 years and will not significantly increase your cash or capital growth.
- Rental yields are always on the headline, especially with the oversupply areas, try to avoid those ads or sellers statement “at least if your property won’t grow so much in the next 20 years, you will still get 5% or more in rental income”. Read between the lines, gross yield is not net return and with some asset class after property cost and the high body cooperate fee that extremely high in new luxury buildings, you won’t be left with cash at all. Even the tax advantages in some cases won’t bring you to positive capital, sometimes only to balance. Net yield might come closer to 2%, which is less than the bank.
- Some of the best suburbs have very poor rentals and sometimes close to 2.6% gross, the compensation and ROI will come from healthy capital growth, and this is where we want to be. Of cause every investor with his/her situation and risk profile to balance cash flow for those who need more cash to hold the property.
- Always do risk-management on your property before purchase! It’s the same action when you are going to buy a share in the stock exchange. The advisor will provide appropriate risk analysis and the risks and rewards that associate with those Stocks. Same here with property investment! By validating the risk and return that associates with the asset class, the numbers, the property configuration and many other factors, you will have an excellent likelihood to make money in the short term and the long-term will translate into enormous wealth.
- Always analyze your investment portfolio, your current circumstances and your risk profile to establish a clear strategy and roadmap that will serve you well along the investment path.
Investinproperties Pty Ltd is a buyer advocate in all spaces of real estate, investing, building and projects across Australia.
You can be comfortable with a professional, friendly, trustworthy advice and ongoing support with any question or assistance, with your property portfolio and the risk and returns along the path.
We always stick to a strategic roadmap and an independent source of risk advice. It’s our guideline, to make sure we serve only your best interest, while it opens a transparent relationship channel between us.
The risk management effort is to review equity and cash flow risk that associate with the investment, which aims to give our investors better-informed decisions.
The results talk for themselves with clients feedbacks and testimonials. We have very high confidence in delivery and detection of low equity risk purchase that adjusts with our client’s circumstances and the end goal. Contact us here