How would you feel if you knew you could transform the quality of your life simply by purchasing and selling property? More Australian families are becoming property millionaires each year by applying property wealth creation strategies to their existing homes to build a property portfolio. This newfound wealth has allowed several Australians to get the time and financial freedom that they always desired. The best thing is anybody can become a property millionaire. Real estate experts LocalAgentFinder have provided the following ways people can use property to build wealth.
Learn how to leverage finance.
Your ability to own properties depends on your ability to gain finance. There are a few ways to finance the purchase of a property.
Where you purchase the property with your own cash.
Secured loan from a financial institution.
Where you are given cash from a financial lender who will use an asset (usually the property) as security for the loan. If you already own a property, you may be able to use the extra equity value in the property as a security deposit for another property.
Where you purchase the property with cash from family, friends or acquaintances. Depending on how much cash is pooled together, there may or may not be a need for a financial lender.
Invest in property that gives you equity.
To build your property wealth, you need to invest in properties that will accumulate in value. Historically, properties have doubled every seven years. Some tips for accumulating equity in your property includes:
Purchasing the property at a price below the bank’s appraisal value.
If the property is appraised for $400,000 and you have purchased the property for $350,000, then you will gain $50,000 in equity.
Identify ways to boost the property’s equity value.
When assessing the property, look for some quick ways to boost the value of the property. For example:
- See if cosmetic changes such as a good paint job to both the interior and exterior can improve the appeal of the property.
- See if the plot of land will be eligible for sub-division or unit developments.
- See if the property can have extensions or structural changes, such as adding extra rooms.
Invest in property that gives you a positive cash flow.
If you are purchasing a rental property, you will want to purchase one that provides you with a positive cash flow income. This means the income that you receive from the property is greater than the expense of the property. A few things to consider when purchasing a property for positive cash flow includes:
- Understanding the maintenance costs of the property.
- Understanding the repayment costs of the property.
Understand negative gearing.
Should you not be in a position to purchase a property that provides you with a positive cash flow, you can opt for a negatively geared property. This means that the expense shortfall will need to be covered by another income source (usually your personal income). The short-term financial expense can be offset against the equity profit when the property is sold.
There are some great books and websites that discuss how to build property wealth effectively. Below are a few resources that you should check out before starting property investment.
Rich Dad, Poor Dad by Robert Kiyosaki.
This is a great book that explains how to create wealth. Robert Kiyosaki explains the cashflow quadrant. Essentially, wealth is built by owning income-producing assets. Kiyosaki illustrates in his book how owning cash flow positive assets such as property can help you accumulate wealth.
The 3+1 Plan: The insider’s way to achieve financial freedom with just 4 properties.
This book provides a property acquisition strategy that will allow investors to finance their lifestyle with a passive income.
Property wealth is allowing more Australians to earn financial freedom through equity gains and passive income. For those that dream about escaping the rat race, turn the dream into a reality by leveraging property and the tips provided to accumulate your wealth in the future.