Believe it or not but you can actually buy an investment property for under $10,000. By that I meaning using less than $10,000 of your own money. This small amount can be a great way to break into the market and ensure you have your stake on a piece of land before it goes up in value.
You can purchase an investment property for cheap and that will get you started in the market. This property may not be able to deliver financial freedom overnight, but as the famous saying goes:
“A journey of 1,000 miles begins with a single step”
Can you buy an investment property thousand dollars?
I want to show you how you can buy property for under ten thousand dollars of your own money.
This is going to be a step by step process and it’s a very simple one. This thinking came when me and my wife were trying to find a way people could break into the market with the lowest amount of money. We thought ten thousand dollars is very achievable for a lot of people so we wanted to start with.
Step #1: Find A Piece Of Land Or Property Worth $100,000
Find a piece of land or a property worth $100,000.
Let’s be clear here it’s probably not going to happen in the center of Sydney, it’s probably not going to happen in Melbourne, it’s probably not going to happen in Brisbane. You’re going to look you have to look outside of these highly populated areas and look at more rural areas.
I know there’s some places in the central coast, which is just north of Sydney, where you can buy blocks of land for a hundred thousand dollars or less and there’s some blocks of land in Newcastle for a hundred thousand dollars if you know where to look.T here’s blocks of land in great places that are not highly populated like Sydney but populated enough
Step #2: Put Down A 5% Deposit
Find a piece of land or property worth a hundred thousand dollars spent $5,000 on the deposit which is five percent of the purchase price
Step#3 – Get Lender’s Mortgage Insurance Added to Your Loan
Get lender’s mortgage insurance added to the loan rather than paying it for yourself.
Lenders will often have what’s called “lender’s mortgage insurance” on to the costs of your loan when you don’t have a 20% deposit.
When you have less than 20% they will say that because they are taking extra risk, they need you to pay this insurance premium. This will then offset their losses if you end up going belly up and they lose some money. This fee can often get that added to the loan rather than paying for it out of your own pocket
Step #4: Pay Stamp Duty
S far we’re out of pocket just $5,000 of our own money. Step number four is to pay stamp duty.
I’ve done a quick calculation of stamp duty in New South Wales on land worth a hundred thousand dollars to an investor. It estimated around $3,500 so pay stamp duty around $3,500.
Step #5: Pay Other Fees
Now pay other fees such as solicitor fees and your mortgage closing costs. Overall closing costs differ from property the property but let’s say if could get that done for $1,500. Well that adds up to $10,000 in total.
$3,500 stamp duty
S$1,500 other fees
So it is possible to buy a property for under $10,000
Strategy After Purchasing The Property
Your strategy for after purchasing the block of land or that block of property may vary considering how you want to go about it.
If you buy land you may want to hold onto that land for a couple of years (obviously you’ll be paying interest rates during that period). You could then have that land reassessed in a few years time and if it’s gone up in value you could leverage against the equity that you have in the land and get a house built. Use that equity to get a construction loan.
You could build the house then get it revalued after it’s built and hopefully it will be worth more than the money you put into it. You could then either leverage again or you could go and sell that house and use the money to buy another property.
If you’re buying a property that is existing for under a hundred grand in a small town or something you can then rent that out or you can renovate it. You can use that property to produce income for you.
So there you have how to buy a property for under $10,000.