PROMOTED BY HOTSPOTCENTRAL.COM.AU
By Michael Fuller, founder hotspotcentral.com.au
The BRW Rich List Top 200 published in the Australian Financial Review in 2016 revealed that 50 of the wealthiest people made their fortune through bricks and mortar … mostly through developing and selling property – rather than investing IN (keeping) property like average investors.
Average investors believe that purchasing properties and growing a large property investment portfolio is the way to build wealth. Subsequently, many leave all of their equity in their home and investments and wait for market forces to grow its value.
Wealthy investors, however, actively build their wealth in 5 ways … and now aspiring investors can get started with as little as $10,000.
- They always buy under market value.
- They look for cash-flow positive investments.
- They constantly monitor the market to buy and sell at the right time to take up better growth opportunities.
- They use experts and partner with successful property developers to leverage their contacts, time, experience and expertise to make more money, faster.
- They develop property … and here’s the crunch – they don’t always keep it.
Does it surprise you that many wealthy investors don’t actually keep property?
It’s true. The most successful investors are the ones who partner with reputable developers, providing them with seed funding to get developments off the ground.
In return, these developers are happy to pass on their Developer’s Profit (remember this is not the only place a developer makes money!)… allowing the ‘Armchair (investor) Developer’ to buy property at 15-25% below market value (cost price), or passing on profits in the form of good cash returns to investors who choose not to keep property. Find out more about our Armchair Developer program and how you can buy property at 15-25% below market value or invest in property development with as little as $10,000.
Sound too good to be true? Then watch this case study video on how Tracy Smith, an ordinary SMSF investor, got her townhouse at 21.7% discount to bank valuation with instant equity and positive cash flows, and after having retrieved her original investment.
Many people believe that you have to have money, and significant money, to make money. It’s true to some degree, as most investors who purchase (and keep) property at cost price have to have a very large initial investment to do so.
But, as innovative crowd-funding opportunities open up in Australia, through platforms such as Hotspotcentral.com.au, anyone can partner with developers and trade in property for as little as $10,000.
But most of us mere mortals aren’t aware about two things:
- We need as little as $10,000 cash to partner with a developer and make around 20%+ cash returns, without keeping a property.
- We can access this cash from our self-managed Super funds.
With 72% of investors stuck just owning one investment property … so says the ATO … this is exciting news for all aspiring investors. You can build up your Super or cash deposit funds by trading in property development (investing for cash returns), until such time as you can afford a much larger deposit to partner with developers and purchase cost price property to build your portfolio … if keeping property appeals to you. Of course, not everyone wants to have to deal with tenants and property management issues.
There are a few key considerations investors need to be aware of to make money in property development through SMSF.
- Buy in suburbs BEFORE prices go up
By choosing the right locations, you could see your investment money work harder for you. Free research tools like Boomtown (at boomapp.com.au) can help you pinpoint these suburbs with scientific accuracy. This web app collates and analyses the 8 known supply and demand statistics for over 15,000 suburbs, spitting out its predictions for the best growth locations according to your budget and strategy. Its predictions have consistently outperformed the market average growth as well as the expert predictions quoted in the media.
- Buy under market value
Successful investors make their money buying property at wholesale (cost) price. This means they never buy off-the-plan or pay retail prices. They provide seed funding to developers in exchange for property at cost price – 15-25% under bank/market value – or in exchange for healthy (20%+) cash returns on cash-only investments. By buying under market value, they ensure they have a safety buffer against changes in market conditions during development or in the future.
- Establish the set-up costs
Choosing where to invest wisely and controlling the set-up costs are paramount now the days of double-digit growth are over. Be weary of spruikers or financial planners who are set to pocket handsomely from referral commissions, eating into your profits. They may not have your best interests at heart.
- Choose the investment approach that suits your budget and strategy
Don't rely solely on market forces to deliver capital growth. You really can manufacture your own capital growth in two ways:
- Partnering with successful developers to get cash-flow positive property at cost price and significantly below bank valuation
- Investing cash with successful property developers for around 20%+ cash on cash returns (sharing in the profit), and not keeping a property on completion
Why not mirror what Australia’s wealthy and successful investors have done. You would be foolish not to. In fact, here’s a FREE Infographic on the 5 Ways Wealth People Make Money In Any Property Cycle, to get you started.