Creating real wealth with investment property is not hard you just need to plan and have a strategy. Property over the long term usually does very well as you have seen for the Sydney market. The real wealth starts from the scarcity of a resource; in this case, it is land. Everyone wants to live in Sydney and there is only so much land. They are not making more of it so if you want to live close to the CBD then the price increases. However, there are other factors that affect the cost of the land which are external, for example what is the demand to live there, does it have views, is it close to amenities, etc.
So how do you make a greater or faster uplift in the price of the property, forcing up the value of your investment? These are called my advanced strategies. So you can just build a standard house, which will do well over the long term, as long as you have researched the area, but doing some advance strategy investment can give you far greater returns. It is usually doing a duplex, or a dual occupancy property, maybe multi units or town houses on a site, splitting the land up or subdividing, adding a granny flat or doing a renovation, knock down and build. These strategies allow you to make much faster capital gains and rental returns on the property – giving you better cash on cash return i.e. the yield on the property if a rental. Or the capital growth giving you an excellent return on initial deposit you put down on the property.
For example, when it comes to property usually if you split something in two – then the two things will be of a greater worth than the single property. Lets say you had a block of land and it is worth $400k and there is the ability get an approval to build a duplex for $400k then the total cost would be $800k, that would be your cost to buy and build. Once completed each side of the duplex is valued at say $450k then the new value of the real estate on that block of land is worth $900k….. that is $100k profit. The rent return on each unit would be $450pw per unit giving you a grand total of $900pw or $46,800 gross income for the year. Let’s say you had 20% deposit that you paid on the purchase which is $160,000 and the profit or uplift in the project is $100,000 then the return on your investment is 62.5% not bad in a 12-month period and on competition the cash return on the investment is 5.8% ($46,800 / $800,000 x 100 = 5.8%), which is still better than the banks are paying in interest.
So if you’re looking to make real wealth through investment property then you should talk to the experts, know your numbers, do your research, have experts who are activily investing themselves help you through the mine field and the last thing is to actually take action and don’t be a fence sitter and do nothing at all.
At Blue Wave Property Strategies we are here to help you “Ride the Wave to Wealth” ….. to help you work out a strategy that suits you – one that is actually do-able with great positive cash flow results! You may not know the untapped financial potential you have hidden away until you speak to an expert.
Give Chris a call now on 0434 449 455 or drop us an email here and one of our experts will get back you asap!