You might think that being a millionaire is out of your league. After all; you aren’t the heir to someone else’s fortune. Nor have you invented something that will make you millions straight off the bat. But, what if I told you that becoming a property millionaire IS an achievable goal?
Don’t worry. This isn’t a blog post about some crazy “get rich quick” idea or a pyramid selling scheme. The aim of today’s article is to show you some realistic strategies you can take. What’s more, they are ones that anyone can follow.
Yes, you’ll need some money to launch your property empire. And it’s a form of passive income that works. But, I’ve not heard of anyone getting properties for free!
What this blog post will do is show you how to maximize your investments. That way, you’ll enjoy a higher return. And you can use the profits to keep building your portfolio.
Intrigued? Here’s what I learned from one of my best friend who’s in this industry and is ranking in millions. Here is what you need to know:
1. Start small
There’s no point getting yourself into high levels of debt to start a property empire. Instead, you should start small and think big. Investing in property is a bit like growing a plant. The process is sometimes slow, but that plant will eventually turn into a tree. And when that tree produces delicious fruit, it will be worth the time and effort!
To put it another way, growing a property empire takes time. From humble beginnings, you can expand once your initial investment is profitable. Next, you just “rinse and repeat” so to speak!
2. Real estate agents are your friends
It might be tempting to do all the hard work yourself. You may also wish to avoid real estate companies to save money. The truth is, you won’t get very far without them. Why? Let me explain.
First of all, people that sell properties often do so through a real estate agent. Second, they are privy to upcoming trends you might not know about. Take a look at the new information from Bridgfords, for example. And, third, they can be useful in negotiating with property owners.
3. Be patient
Some people are so hungry for money that they want to “flip” properties fast. Sure, they might have seen programs on TV like Flip This House. And they may have got inspiration from them to make money fast.
The truth is, building a property empire is different to flipping. The main difference is that you own the properties for a long period. They aren’t short-term investments as with flipping.
That means you need to be patient and grow your empire slowly. You won’t become an overnight millionaire! But, you WILL become wealthy if you’re disciplined.
4. Stick with your day job (for now)
It might be tempting to quit your job and just live off your savings while you grow your property portfolio. The thing is, that’s a high-risk strategy that seldom pays off. What would you do if things went sour and you ran out of money?
I recommend that you keep working for now. Consider your property empire as a side-project. Only when you can realistically live off the profits should you leave your job. Doing so before that is financial suicide!
5. Don’t judge a property by its appearance
Okay, so you might have come across a few dilapidated properties in your research. Your head is telling you to avoid them like the plague. But, what if I told you that your head shouldn’t always rule your heart?
One of the ways to make big profits is by renovating properties that are tired and worn. Consider getting a survey done of potential places. You can then get building quotes for the work. Next, find out how much those properties could be worth once renovated.
If the figures look good on paper, you should consider embarking on such projects. Especially in areas that are experiencing a population growth.
6. Hire an accountant
Hang on a minute! Why are you recommending I hire an accountant, I hear you ask? The truth is, building a property portfolio is like running a business. And with any enterprise, you have to keep costs down to maximize profits.
Accountants are useful for property investors. They can recommend strategies that will help you save money. And they can suggest ways to be more tax-efficient. In other words, keeping more of your profit in your bank instead of the government’s accounts!
7. Invest in your local area
It might be tempting to start buying properties in nearby towns and cities. After all; you could make more money that way, right? The truth is, you can also do that in your area as well. Unless you live in a rural village with a population of ten people, of course!
Let’s assume you live somewhere inhabited by a few thousand people. There will always be demand for rental properties where you are. Here’s your chance to capitalize on that demand by offering quality rentals!
8. Look for unique ways to add value to your properties
It doesn’t matter whether you wish to rent out your properties or flip them in the medium-term. What does matter is that you offer something that people will find useful.
For instance, let’s say you buy your first house and it has a large attic space. You could convert it into a bedroom with an en-suite bathroom. That means large families or groups of tenants could live in them. And when you come to sell the house, it will be worth more than what you paid for it.
9. Put up as much cash as possible
Unless you’ve won the lottery, you’ll need to take out a mortgage on any properties. The thing is, if you don’t have a large deposit, you won’t get good mortgage rates. That’s because lenders will deem your application as a high risk.
Instead, consider putting up at least 25% of the property’s value as a deposit. Doing so will give you the advantage of better market rates. What that equates to is lower monthly repayments. And you’ll also have access to a broader range of lenders too.
10. Find out where upmarket retail chains are opening up
Here’s an interesting way to determine if an area is affluent or not. You can determine where an upmarket retail chain is about to open up a new store! That’s because such brands will only open up in areas where they think people have money to spend.
Now, imagine if one area, in particular, is in a “regeneration” zone. You can take advantage of low property prices and rent your places out for a few years. You could then sell at a time where you might get a high ROI, such as 50% or more!
11. Scrutinize your tenants
You want to make sure that your tenants can afford to pay you rent. If they can’t, you’ll have to cover the cost of mortgage payments yourself. And that’s bad news if you want to build up some cash to invest in future properties!
That’s why it makes sense to find out more about your tenants before you rent to them. What do they do for a living? Do they have a stable credit history? It’s worth doing such checks on prospective tenants to lower your risk.
12. Do plenty of online research
So you’ve found a property that you think is ideal to start your empire. Before you agree to buy it, do lots of research on the Web first! The things you need to determine include:
- Vicinity of amenities like schools, retail outlets and hospitals;
- Crime rates;
- Population;
- Average salary per capita.
Just because a property looks okay doesn’t mean it’s suitable for prospective tenants. And if you plan to sell in the future, it might not be good for future buyers. In-depth research is key to achieving a successful purchase.
13. Don’t put your eggs in one basket
As a sideline, you should consider putting some money into a property investment trust. In a nutshell, this is where you pool your money together with other people. That cash then gets used to buy luxury properties or several homes.
You then get a percentage of the profits as your return on investment. You can then use those profits to continue building your property empire. It’s also a good secondary source of income.
14. Learn a building trade
It’s no secret many property investors also get their hands dirty with renovation work. After all; cutting down on repair costs is a brilliant way to increase profit potential!
You might wish to consider learning a building trade. Skills such as carpentry, bricklaying and plastering are all useful.
15. Look out for repossessions
When a bank forecloses on someone’s home, they will want to sell it fast. The way they do that, of course, is to sell for below the market value. You can take advantage of such sales. In some cases, you could even flip properties after a brief period of renting them out.
That’s what I learned chatting with my friend over coffee for hours. I hope you were able to pick something up like what I did.
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