Hello! My name is Ben Everingham and today we’re talking about one of my favourite topics, how to get a twenty percent plus gain on your investment property within the next two years.
Perfect! So, for some investors sitting on today’s call, they’re sitting there, scratching themselves, going ‘a twenty percent gain over the next two years, is this guy crazy?’ and there’s probably other people sitting on today’s video and going ‘a twenty percent gain in the next two years, I’m looking for thirty percent!’ or ‘I’m looking for forty percent!’ or ‘I’m looking for a hundred percent!’ and that’s completely cool, but today’s video is all about how to achieve this twenty percent gain with a limited amount of risk, without doing anything crazy, or anything aggressive, or anything out of the box. We’re not talking about auctions, or vendor finance, or developing, or subdividing, or doing town houses. We’re talking about a simple, bread and butter strategy that most investors should be able to easily follow and execute.
So let’s get stuck into it. There’s four key parts to this concept of getting this twenty percent gain from your next investment purchase over the next two years. The first part of the strategy is so simple; buy below market value! And what do I mean by that? When you find your next investment property, do whatever you possibly can to make yourself at least five percent on the way in. So, five percent doesn’t sound like a lot, but five percent is definitely better than paying market value. So there’s probably people, again, listening to the video that are like ‘I can easily buy five percent below market value’ or ‘I can buy ten percent below value’ and that’s fantastic, but this is a very conservative, simple to execute strategy. So the first part is just get that five percent saving on the way in, and you need to be able to justify that, either through a desktop evaluation from someone like RP Data or Real Estate Investor, or you need to be able to clearly demonstrate that in the sales history data from the suburbs. So again, you can get that sales history data on places like realestate.com for free, under the ‘Sold’ section. You can also get that data from paid sources like RP Data or Real Estate Investor, and that’s a little bit more thorough. But again, make sure you that make at least five percent on the way in.
The second part to the strategy is simple, buy in a rising marketplace. We’ve talked about this before, but simply put, we’re looking for a marketplace that is in the stage of a rising market. So anywhere between, lets say, eight o’clock and ten o’clock on the property clock. Meaning that there’s still potential for that market to continue to increase in value before it reaches the top, and there’s also a little bit of pressure on that marketplace, and people know about that marketplace, so that extra demand is gonna push prices up. And at the end of the day, a lot of investors are basically drawn to certain marketplaces because of speculation and because other people, magazines, online sources, people like myself, you know, promote a certain area at a certain time. At the end of the day, there’s some fundamentals that make areas good, but often price growth like Sydney, like Melbourne, like Brisbane, like Canberra, like Perth, is driven by the marketplace remaining flat for a period of time, and then going through a period of either rapid or at least consistent price growth. So what we’re trying to do in terms of time in the market is really one of two things. We’re trying to get a five percent gain on the first year, in terms of the capital growth value on your property, and a five percent gain in the second year. And so again, that’s relatively easy to achieve if you buy at the right time, and what I mean by that is, Sydney, for example, historical growth rate is 6.1 percent, Melbourne’s is 5.9 percent per annum over the last ten years, they’re probably both a little bit higher than that now because of the ridiculously crazy growth that we’ve seen recently. Brisbane’s price growth is 4.9 percent, so investing in a metro-market place, or a high quality market place is probably your best bet to achieve those sorts of gains that you’re looking for. So again, just to repeat very simply, five percent growth on the way in from buying under market value, and then getting five percent capital growth in year one, and five percent capital growth in year two.
The fourth and final part of this strategy is buying an ugly duckling. So buying something with the potential to cosmetically renovate. I’m not talking about structural stuff, I’m not talking about hundreds of thousands of dollars worth of renovation. I’m talking about a property that presents poorly so that emotional people won’t buy that property, and people like you and I that can see what it could be once it’s had new carpets, had a new paint job, had some new lights done, had some new window finishing. Maybe landscapes, some new grass, just tidy it up so that we can add another five percent of value. So five percent of value on a four hundred thousand property is really only twenty thousand dollars. So if you get your hands dirty and maybe put between ten and twenty thousand dollars into the right property at the right time, you should easily get, for every dollar that you spend, two dollars back. So if you spend twenty grand, you should get forty out. And that twenty thousand dollar gain that you’ve made through that activity is gonna be that five percent that you need on that four hundred grand property.
So super, super simple strategy. Again, property investing doesn’t have to be rocket science, it doesn’t have to be complicated to achieve great results. So at the end of the day, there’s a simple way that you can get twenty percent gain on your investment property, or your next investment property in the next two years. there’s so much more than that, you can potentially do, but that’s every investors goal as an absolute minimum. And the reason you apply this strategy is because you would like to rinse and repeat, buy your next property without any of your own cash down, so the great thing about putting a five, ten, or twenty percent deposit down when you buy this property is that the twenty percent gain that you get on top of that is purely equity. Which means you can possibly go and refinance, let’s say, ten percent of that twenty percent gain, and use that deposit for you next investment property without pulling money out of your own pocket.
So really simply put, to recap again today, buy really well and make money on the way in, at least five percent. Buy in a rising market place and make five percent growth in year one, and five percent growth minimum in year two. And then go do your quick cosmetic renovation, which adds another five percent of value. So I hope this video has been meaningful and simple to follow.
Go get stuck in it, until next time, stay hungry! Thank you.