It’s no secret that real estate investment is often the most direct route to generational wealth, but every investor’s journey is different. It’s common for an investor to live in a property they own, while at the same time purchasing additional properties to rent out, expanding their portfolio along the way. This is a great way to see capital growth over time while generating equity in the short term. Whilst there’s no “one size fits all” approach, there is a roadmap of common steps that can help you to develop the investment property portfolio of your dreams.
The first step is to understand and define your personal investment goals. This can be as simple as setting a monthly passive income target, which can then be extrapolated into a yearly target. Knowing these kinds of figures in advance can help you to reverse engineer an investment strategy that suits you best and can provide clarity around the number and types of properties that you will need to achieve your goals.
Once you’ve determined what you’ll need, it’s time to assess how you’re going to get there. Will you use existing home equity to finance future deposits? If you’ve built up equity in real estate over the years, you may feel comfortable leveraging it to expand your property portfolio. This can be a fast and effective way to access the capital required to make a new deposit.
Alternatively, many investors consider buying a property in partnership with a friend, family member, or partner. This is called a joint venture and can provide a quick way to raise the capital required for a new deposit. If time is of the essence and you have a someone you trust to enter the purchase with, joint ventures can be a great way to expand your investment property portfolio. However, it should be noted that many joint venture partnerships become tricky as the pressures and stresses of property investing take their toll on the relationship. If you proceed down this route, make sure that you and your prospective partner have the same expectations and goals for your shared investment before entering into a contract together.
Once you’ve acquired your new investment property, actively increasing its value will quickly build equity and increase rental returns, which means you’ll be closer to your next deposit! Renovating is the most common way to add value to a property, with larger and more substantial renovations providing greater returns. However, even simple improvements like a fresh coat of paint, some landscaping, or a new carpet can work wonders in seducing would-be renters.
One savvy method of increasing both equity and rental income is to build a self-contained dwelling, or ‘granny flat’, on your property. Although this can be more capital and time intensive (especially in some council jurisdictions), an investor can expand the number of rooms available essentially overnight.
The goal of each of these steps is to rapidly increase equity, capital, or cashflow, so that you’re able to make that next deposit sooner than you otherwise could have. Setting clear and measurable goals, thinking creatively about finance, and finding or creating new value in an existing property, are all essential skills for an investor looking to build or expand their investment property portfolio.
With the right team and guidance on your side, these dreams can quickly become a reality. The team at Simply Property Investment work with you to develop a tailored strategy to suit your goals and needs. We’re with you every step of the way and our expertise and years of experience could just be your greatest asset to building wealth through your investment property profile. Take the stress out of property investment and contact us today by calling 07 5570 2579, or email us at contact@simpleproperty.au. Otherwise, visit our website to learn more about our business and the services we have to offer.
