There are many ways to make money but investing in real estate has always retained a fond place in the hearts of Aussies. However, there is also more than one way to make money in real estate, which is why it’s best to chat with an experienced Property Investment Consultant in Melbourne or Sydney before committing yourself to one approach over another.
Why is real estate so popular with Aussies?
Everyone knows that the property market is cyclical with prices rising and falling fairly regularly, often every 5 to 7 years. Over time, however, this market generally has an upward trajectory. So, for example, if you purchase a property today, despite a few ups and downs in property prices, you can generally expect a decent increase in capital growth over the next 10 to 14 years. That’s why investing in property is so popular in Australia, because it increases in value regardless of the economy.
What’s the key to making money in real estate?
Regardless of the economy, interest rates, inflation, supply and demand and local conditions, the key to successfully investing in property is to buy the right property at the right price and in the right location. This is why you need to speak with a Property Investment Advisor in Sydney or Melbourne because they have the expertise to guide your investments, regardless of the market.
Five Strategies for making money in the real estate market
Understanding the market and which strategies are likely to outperform others in the current market is a skill that takes time to develop. A Property Strategist understands all these strategies and can help you develop, manage and diversify your property portfolio to ensure resilience, even in a slow market.
However, before you contact a Property Advisor, you need to know which of the following six different approaches suits you best. These are the most popular ways to make money in real estate. You can focus on one approach completely or combine different approaches as your needs change and your confidence grows.
The Aussie dream is to own your home by investing money otherwise wasted in rent. Over time, the value of your home increases and you can trade up to a property of greater value. When you retire, you can sell this property, release your equity and purchase a lower-value home with cash in the bank. It’s a long-term strategy that’s been the strategy used by most Aussies to plan for their retirement.
Buying rental properties is one of the most popular ways that Aussies start investing in property. Your priority will be on earning a good rental return and a passive income with capital growth expected but only as a secondary priority.
It’s a long-term strategy that can be highly successful, particularly since the rental income pays the mortgage and you receive tax concessions due to negative gearing. Your Property Investment Consultant in Sydney or Melbourne can help you develop a substantial portfolio worth millions of dollars in just a few years if that’s your goal.
If you prefer a short-term strategy for making money in real estate, then flipping houses is a solid option. Of course, there are no guarantees, but if you buy the right property at the right price and in the right location, renovate it to a high quality and resell it in 3 to 6 months, you can make a significant return on your investment.
The key to a successful flip is in knowing the market and not overcapitalising on the renovation costs because you need to make a profit. For tradies and DIY enthusiasts, this can be a remarkably successful strategy but if you have to pay for all the trades, then flipping can be expensive and profits minimal. It’s a strategy that’s best discussed with your Property Strategist who will know if it’s the best way to achieve your financial goals, given the current market.
A more moderate-term strategy is to buy land, develop it and then sell it for a profit. This approach realises the potential in the land, for example building multiple townhouses or duplexes on land that previously only provided a single-family home. It also requires a significant upfront investment because you turn a profit until the units or townhouses are sold.
Given that you’ll need to knock down the existing property and build from scratch, it can take anything from 6 months to more than a year before you realise your profits. However, it’s a solid strategy that can make a lot of money for investors. So, if you believe this approach fits in with your financial goals, talk to your Property Advisor who can help plan your strategy.
With this approach, your focus is on capital growth, so you purchase properties in areas where demand is always high, such as in inner city suburbs, and close to hospitals or universities. Even though you receive a rental return on these properties, it’s the expected growth in value that’s your priority, not the rental yield.
The key to making this strategy work is to buy low and sell high, keeping an eye on the market to judge the best times to buy and sell. Your Property Strategist can help you manage this type of portfolio as it requires a keen understanding of the market at all times.
Another long-term strategy that’s fairly popular in Australia is to buy land, hold it and sell it to a developer when a good opportunity arises. As you can appreciate, this is another strategy that requires the expertise of a Property Investment Consultant in Sydney or Melbourne because you need to know what land will become valuable in the future.
Now you know the six most popular ways to make money in real estate, it’s time to discuss your plans with an experienced Property Advisor. Call Maple Property Group on 1300 039 376 or send us an email enquiry and ask us for an obligation-free consultation.