Steps to Freedom: Make Money with Real Estate - starting from where you are!

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Make Money with Real Estate Starting from Where You Are

7 tips to make lots of money with real estate

Start From Where You Are

You can do this! I don’t care where you are no matter what you do right now you can build a real estate empire. If you will just take the steps outlined here you can be on your way to a life style that others only dream about.

What To Do First - Start Saving

The first step towards your life of luxury is to save. Each week or pay day, just set aside a certain portion of your pay. Soon you will have enough saved for a start on your investment journey.

A much quicker way is to use equity, either the equity in your own home or equity that you may be able to "borrow" from somebody else.

Of course that other person would need to be supportive of your property aspirations and be willing to let you borrow against that equity.

What To Do Next

Buy Your First Property! Buying your first investment property is the most important investment step you will ever take. It is a step towards your financial freedom. Once you have made it your perspective will begin to change, sometimes very quickly.

Using the deposit funds that you have now secured as above, look for a property that is attainable.

In addition to an attainable property tyhere are several other selection criteria you need to keep in mind. Further details on these can be found on the SELECTION CRITERIA PAGE.

Don't Ever Sell

Here is where a lot if would be property moguls, make their biggest mistake. They look for a cheap unit or house to buy and possibly fix up and then they sell it. Or maybe they wait for the right time in the property cycle to buy a nice properly and then they sell it. This is like killing the goose that laid the golden egg!

The whole point is that there is no other investment vehicle that

You may be thinking "How will I retire if I am never going to sell?"
Just before I answer that question, let me ask you this:
Do you think there is anywhere that you can put your money that will give you the benefits of property ownership? I'm sure you are already familiar with the numerous advantages that investment property holds over any other form of investment.

Long term tax advantages.

Price stability.

Capital growth that is consistent through property cycles.

Set and forget – investment real estate is a simple to manage and hold investment. You don't have to check the current price every day for fear of wild fluctuations.

Pyramiding Your Investment

With all of those advantages you will be wondering how you build on your initial investment if you are never going to sell. It's as simple as this, you use the value of that property plus some of the equity from a previous property to fund your next purchase. Then after a while, say a year or so, you do it again.

Don't underestimate the value of what I have just said, or just how powerful this method is. The important thing is to maintain your faith and confidence in the long term value of the property market.

The Power Of Compounding And Pyramiding

This is a powerful driver towards you making money with real estate.

Just as an example, say you bought a property now while prices are stagnant or in decline. Yes, yes I know it sounds counter-intuitive, but buying while prices are low is a really good idea!

Any way, so you bought a property worth say $300,000. A nice little 2 bedroom unit in a new complex near the centre of an up and coming town or city.

So you put up 5% deposit and borrow the rest. That means that you need to come up with cash or equity of $15,000. But then, and this is the exciting part, then you own a property worth $300,000.

If you have bought in an in demand area, you could reasonably expect that the property will experience capital growth of 5% to 8% in the next year. That will mean that by the end of year one your property will be worth between $315,000 and $324,000.

Whet you do NOT do with that increased value is spend it!!

What you do the next year is buy another property.

This is how you make money with real estate!

Let's examine what you would have at the end of the second year if you followed this plan. Your first investment property is now worth approximately $340,000 and the second investment property you have bought for $315,000 is worth $331,000.

   START OF YEAR ONE
          Starting investment or equity:  $15,000
          First property:                $300,000

   End of first year Property 1 value:   $315,000
                Newly Acquired Equity:    $15,000

   YEAR TWO
          Purchase second property:      $315,000
          (Higher price to account for increasing values)

   End of second year Property 1 value:  $340,000
   Less purchase price:                - $300,000
            Property 1 Newly Equity:      $40,000

   End of second year Property 2 value:  $340,000
   Less purchase price:                - $315,000
            Property 2 Newly Equity:      $25,000
                                         --------
   Your Total Newly Acquired Equity:      $65,000

If you continued with this plan, where every one or two years you bought another property, then by the end of year ten you may have 7 to ten properties.

Your first two or three properties would have approximately doubled in value and the median priced house that you were aiming to buy would be valued about $550,000 to $600,000.

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Wednesday, August 12, 2009

Make Money with Real Estate - starting from where you are!