The secret to being a successful property investor,
1 You must buy a property.
2 Don’t sell it without realizing a profit.
There it is, the magic formula. Everything else just is just an elaboration on those two points. It’s amazing how many people pay thousands of dollars attending seminars, workshops and mentoring programs, when all they need to do is follow those two simple principles.
Ok, let’s look at it a bit closer.
1 You must buy a property.
Pretty obvious isn’t it. Yet you would be amazed how many people who want to be successful property investors never actually get around to doing this. They do research, attend seminars, read books but don’t take action. Why not? Many reasons but mainly it comes down to fear. What if I fail? What if the market crashes? What if tenants trash the place? What if? What if? What if...
Well, what if you don’t buy a property? You will never be a property investor, that’s for sure. So by all means, educate yourself, but take action and buy something, and the sooner, the better. The biggest regret most successful property investors have is they wish they started earlier. So learn from that and just buy something now. What should you buy? To be honest, I don’t think it matters that much. I have my preferences which will be explained later, but if you stay with mainstream property, you will be fine.
2 Don’t sell it without realizing a profit.
There are lots of ways to make a profit in real estate, and if you want to learn them all, go to the seminars and read the books. But this is the lazy person’s guide, so I suggest doing what a lazy person does best, waiting. Unlike rule one, doing nothing will actually make you money. Time and property have an incredible relationship. The longer you hold property, the more you make and you really don’t have to work at it. Just let it appreciate in value all by itself. Yes, all right you do have to do some things, but not much. Essentially it must be rented, but leave that to a professional, you have better things in life to do than worrying about property management. Bookwork must also be kept up to date. You could just hand over a shoebox to your accountant, but he will charge you a fortune to do it for you. There’s not much involved anyway, just keep track of money in and money out. A simple spreadsheet will suffice or there are good accounting programs available for not too many dollars.
Anyway, back to the bit about realizing a profit. For as long as people can remember, property in Australia has more or less doubled every 7 to 10 years. So that means if you buy a property for $300,000 today, in fifteen years it should be conservatively worth $900,000 which would give you a $600,000 profit ($900,000-$300,000=$600,000). That equals $40000PA. That’s right, your property is appreciating at an average of about $800PW and you don’t have to do anything. Now just imagine if you had several of these properties.
As mentioned earlier, these figures are relying on the historical fact that property doubles every 7 to 10 years, what if it doesn’t? What if, as some people believe, property prices crash? Well as long as your LVR (Loan to Value Ratio explained later) is OK then there is not a problem, just don’t sell yet. Eventually they will rise and you will make a lot of money. Just remember the rule, don’t sell without realizing a profit.