Success in property Blog !!!

10 strategy formula

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2)CASE STUDIES

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SUCCESS IN PROPERTY

Strategies !!!

Success means many things to many people. From my experience to be successful in property I had to change and renew my mindset. In my case, it was “Gods values”

Becoming a Christian, for others, it may be completely different again.

Believing in yourself is very important, believing you're worthy of wealth, not that being wealthy will make you happy, but is a value you need to focus on !!!

Being passionate about this asset class is vital, and its energy is what drives you. I love real estate, houses, land, and buying and selling. I love to face fear and be passionate Never quit.

Start small finding a bargain, the search and the hunt for a property that can make me a profit !!!.

My first 4 house renovations in Victoria when I was starting out, yielded very little profit from a lot of hard work and was very disheartening.

Attending as many property seminars as I could, asking questions, and learning as much as possible, combined with real-life experiences gradually shapes and builds to greater things. Being a very poor money manager myself, and going broke, to sleeping in my car was not a nice experience. But it was the FEAR that was the fuel for success.

“From little things, big things grow”

I'm sure you have heard this saying before but very true. Start small and build from there, success without hard work has no value, and will not last.

7 years ago I started a new company ( Creative Property Ideas Pty Ltd) with the mindset to grow capital from the property from as little capital outlay as I could, creating an income stream for my family. So I had $5,000 and purchased 3 lots in 1 line in Wolseley SA, the property was advertised for $25,000 and we offered $5,000 and secured it. We then resold each lot off separately $6,000 each, for a small Profit. This first deal taught me two things.

1. There is always a bargain out there in the market every day if you look.
2. Not to be afraid to make low offers to offend anyone, because some people just need to sell !!!

$350 a week income from the first auction!

First purchase 2013 3 lots in Wolseley SA $5,000

Re-sold $25,000

$13,000 profit

From there we ventured into travelling and attending auctions for the sale of land unpaid rates, where the council sell off land where rates are 4 years or more overdue. Not nice for the people owning the land, but it's the Law, and it creates opportunity.

From there we went to Cobar NSW unpaid rates auction 2013, spent $10,000 acquired 7 blocks of land. All around the $1000 mark some $500.I formulated vendor terms contracts and did some research to make sure it was legal and how much the land would resell for at ( market value ).

The good thing about these auctions is locals don’t value land as high as city buyers do. I was confident that risk was low and that other people, that did not have the ability to get started into the property market, would see that paying them off each week was achievable.

So with the mindset of, use as little capital as possible to grow my portfolio and income stream, I re-marketed each lot at between $6,000 and $14,000 each, with a $1,000 deposit from the purchaser, with purchasers to pay council rates during the period of the contract. Meaning I wouldn't have any holding costs. So after the first auction result, we had:

1): Income of $350 a week, $50 a property x 7 over 3 years
2): Spent $10,000 initially but got $7,000 back in deposits, so total cash outlay $3,000

The reason for this strategy and mindset, was only because I knew if I just kept buying property after the property I would run out of working capital.

So with a $350 a week income, I then worked hard after a little success to attend more and more auctions and build the income stream to $5,000 a week with over 50 properties or more, over 2 years. Learning how to market and sell the properties, formulate the contracts myself, I could make it work profitably. Otherwise, it wouldn't have worked if I had to get a Sales agent and solicitor on every property, portals like ( For sale by owner) and legal templets “ special terms “ for the contracts was all a learning curve.

I also sold off some properties to cash buyers, normal contract of sale to recoup working capital back into the bank.

So we had spent around $50,000 in properties over the 2 years and achieved $5,000 a week income for about 3-5 years, but always needing to be topped with more acquisitions as some purchasers paid off the land and settled the property.

The $50,000 we spent was not from my own capital, but from capital from cash sales of cheap blocks, we managed to acquire through ( unpaid rates auctions, multiple lots, distressed sales) and then resell them. I'm not providing this information to boast, or to brag in any way, please don’t get me wrong. But it's to show the property investor, to think outside the box, be creative, set the mindset right, that there are opportunities every day out there.

Using correct marketing portals when reselling the land is vital to make it work. From here we had an income stream and TIME now on our side. Which gave us the opportunity to purchase a development site (115 West rd Langwarrin south VIC ) 2015 $1,100,000 with 6-month settlement, 3 lot subdivision, and 1 1/2 years later net profit of $600,000.

So with equity and cash, we kept moving forward and since completed 5 more developments. Once the cash reserve was established we moved into( multiple lots ) and buying and selling deals. Strategies employed in property investment vary so much across the board and our model is just one example of creative proactiveness. Depending upon your personality type will determine which strategy you will use.

“10 strategy formula”

The following are just some sample property investment strategies I have picked up from my experience over the years.

1)Leveraging Debt / Capital growth

Purchase 1 property every year with a 10% Deposit, within a 100 k radius of the capital city and using equity from each property to purchase the next property with another 10% deposit, assuming the property market you're in goes up, after 10 years you have 10 properties. On an average 7%, capital growth capitalised your first property should have doubled after 7-9 years.

Risks are bank lending may stop, debt is very high, maintenance costs are high. Rewards are capital growth new per year is very high (see REDA you 80 suburbs website category).

2)Developments/Sub-divisions

One of the fastest ways to accelerate wealth in property is developments. 1-2 years is a normal time frame for small 2-5 lot subdivisions. Larger developments can take 5 years or more with many complexities. Banks will not finance readily on vacant land so expect a 50% deposit requirement and sometimes pre-sales. So speak to broker pre-purchase so you know the lending requirements. Private lenders are great alternatives for developers, with less paperwork, faster approvals. You will pay higher interest though 9-12%, and still need 50-70% equity, but well worth it.

“REDA website category development sites/plans and permits” can save an investor time by listing properties with land and permits in place, saving you months off completing a development.

Look for a minimum of 20% net return per year on you're capital, results of up to 100% are also achievable. First-time developers can struggle through the complexity of council requirements and red tape, so property chat forums like “REDA Chat forum” are great ways to learn from experienced developers and asking questions. Due diligence is a must so,” know the end before the Start”.Some consultants you will need along the way: Land surveyor, town planner, civil and or structural engineer, arborist, ecologist, CFA consultant, telco consultant, draftsman.

3)Renovating for a profit

5% of the purchase price is the standard industry benchmark to work off, so you don’t overcapitalise,higher may be required on top-end renovations. Again “know the end before the start” work out market resell value of the property once completed. Due diligence on costs, and where you could save, i.e (doing some work yourself, limiting some areas of the house, and getting 2-3 trade/supplier quotes ). Look for cosmetic changes more than structural changes, as structural changes do not add value. Aim for every $1 spent you get back $2 on value-adding.

When selecting the property for your renovation our “REDA renovation property deals” and REDA land value deals” is the great starting point. If you're in an area that's growing in value you have the upside of capital growth as well, but don’t depend upon it. Be very conservative on your numbers and BUY as low as possible into that suburb. Don’t buy the first property you see, experience is your best friend, look at least 20-30 properties before you make a decision, by then you would have assessed the market very well and know what other properties are selling for.

4)Buying /selling property

When buying and selling, you're are in a very small minority of investors, as most buy and hold to alleviate paying taxes. So if you're serious about being full time on the property, then paying taxes is fine. This will require more proactiveness and very good organisation skills. As the saying goes ”You make your money when you buy, not when you sell” is the best advice you will receive. It may take years of persistence and experience and learning, but it is very rewarding. Consider yourself someone who buys wholesale and sells retail. Know the properties retail value before you purchase it, which is the golden rule !!!!. You will make mistakes and lose money on some deals, but that's. normal. Minimising risk by not trying to be too greedy too quick, respect that you're in a competitive buying environment against very intelligent consumers. The difference to succeeding is though, “Learning the tricks of the trade” and facing fear !!!.

Aim for a minimum 20% return on your capital with a quick turnaround 3 months . 100 -200 % returns are Achievable, but are not as common ( “See our case study Myrtleford Vic”) and harder to find. REDA website will provide you with opportunities and educational content, so you can grow in the property market.

5)Land flipping for a profit

Flipping land 3 main strategies to follow : (auctions, multiple lots, new developments ). See our editorial ( “Land flipping” ). The great thing about this strategy is it can be done remotely all over Australia without viewing the land, but it is recommended to view the land where possible. Auctions can produce great discounted results unto 10-50%. Multiple lots where you buy 2 or more lots and sell off separately, can produce 100% returns on your capital in a quick turnaround. Once you secure your land on a 3-4 month settlement, you then start marketing each lot off separately during settlement. The key to making this work is, you will need to communicate well with the sales agent to remove the listing of the Internet and their sales board. Your conveyancer can pre-pare a special on-sale contract which is “subject to tiles being registered in your name” and very legal. This will leverage your time better and faster turnaround of your working capital. Again “know the re-sell land price of each lot before you buy”.You cannot “nominate” contracts to another person above your purchase price, because it triggers stamp duty. So it's more simple to settle your purchase, than settle you're buyers soon afterwards.

6)Vendor Financing passive income

Selling property via “vendor finance” can Generate great cash flow for your portfolio. Please check each state laws in relation to this strategy. Basically, the best way is to buy the property below market value, resell at market value with weekly repayments ”special terms inserted into the contract”.If you charge interest you will require an ACL ( Australian credit licence), so it's best not to charge interest and make your profit on the difference between you're purchase price and selling price ( unless you want to apply for an ACL ). It may be difficult to get a solicitor to prepare a contract of sale for you, (“see REDA editorial vendor financing”). You can also purchase this way as well, but check the credibility of the lender and the value of the property very well, as most will sell at an inflated price of 20-30% above market value.

7)Networking with agents

Networking with real estate agents can be a great way to establish pipework of distressed properties. A sales agent may go straight to a property investor who has cash before the property hits the market, to make it quicker and easier for themselves. Where these strategy works are when the property is a distressed property and needs to sell quickly.

8)Positive cashflow property portfolio

By acquiring positive cashflow properties you can build quite a large portfolio. Where rent pays for bank interest and holding costs ( rates, insurances) and there are surplus funds left over. The payoff is that capital growth may not be 6-10% that you will get with blue-chip areas. Usually the lower the rent yield return, the higher the capital growth property. Properties closer to capital cities have lower rent returns 3% (2020) but higher capital growth ( “See REDA website top 80 suburbs”). You may end up with large mortgage debt, but equity in the portfolio over time will potentially grow. Having a balanced portfolio of blue-chip ( capital growth properties 6-10 % ) that can be supported by you're cashflow properties will build equity quicker. But if you're just after income, then cashflow properties maybe you're preferred method. “Maintenance, council rates, insurance" can all add up, so make sure you do your sums properly to get an accurate picture of what you're true net return is . “new houses” and duplex can provide great cashflow, with low maintenance costs and equity from the build. (see REDA website cashflow properties) 6-16% returns.

9)Hot spotting suburb booms

Hot spotting is a game of speculation, education, calculated risks. Savvy blue-collar property investors have access to multiple software and data providers, when trying to find the next growth boom suburb before it takes off, it best to arm yourself with good computer literacy skills

that can show suburbs :

DSR ( demand /supply) score, New roads infrastructure,

Average days on market

Timing of property cycle for that suburb Vacancy rates

Auction clearance rates Median price changes

10)Auctions

Auctions in regional areas are like a mixed bag of lollies you don’t know what you're going to get sometimes. I'm surprised at some auctions I attend at the prices some properties sell for. Capital city areas very rarely produce bargains due to good marketing and higher population and competition. Regional areas produce much better deals. Government properties, council properties, mortgagee auctions, deceased estates, divorce, can produce great deals because you don’t know who will turn up on the day. Most of the distressed properties need to be sold at auction on the day.