How To Invest In Property With Little Money (Ep59)
Not everyone has a lazy $100,000 or $50,000 or even $40,000 with which to invest in property. Some of us only have a little bit of money with which we can start to grow our property portfolio.
So how can you invest in property with little money?
Today I will share with you five tips on how you can invest in property with a little bit of money. You don’t need to be discouraged if you don’t have a lot of money. It may take a little more effort and a little more time than someone who has $100,000 in the bank already or who earns $1 million a year like we wish we did.
Even if you have just a little bit of money property investment is still within your reach.
Tip#1: Look at cheaper properties
Getting into the property market is very expensive if you live in the inner city suburbs of Sydney or Melbourne or Brisbane. But you can find properties for much cheaper if you go outside of capital cities.
You need to do your research on the area. That is very important. Rural town centres can be great places to invest if you invest at the right time and you choose the right property.
I call it the Two Hour Rule. I recommend going at least two hours from where you live in order to find property that is much cheaper than a capital city.
I use the example of Sydney. If you go two hours north of Sydney you can buy a three-bedroom house for under $300,000 on the north of the Central Coast. If you go two hours south of Sydney you can buy a three-bedroom house for around $300,000 in Nowra. And if you go two hours west of Sydney you’re looking at places like Lithgow and again properties are very cheap.
The Two Hour Rule is great because it is a short enough time that you can drive to that property and drive home in a day. It is a lot of driving but it can be done. The drive would most definitely be worth it if you found a property north of Sydney for $200,000 or less.
So go outside of your capital city and you will start to see that properties become very affordable.
Even further out are country towns like Moree that have a population of about 10,000 people. There are actually properties in those areas that are under $100,000. They’re not great properties in terms of quality and maintenance but they are often liveable properties that you could rent out.
Expand your reach and look further out. By looking at cheaper properties you may find that you could invest with even just a little bit of money.
Tip#2: Get a guarantor loan
Banks will offer loans up to 100% to some investors if there’s a guarantor.
Some lenders are now offering for guarantors to guarantee only a portion of the loan rather than the entirety. This can be great because it means that you can get the guarantor off the loan if the property goes up in value or if you pay down some of the debt. It then becomes yours in a short amount of time.
If you want to invest with no deposit then a guarantor could be a good option for you.
Tip#3: Look at joint ventures
A husband and wife will combine their incomes and combine their deposit to invest in property. You can similarly enter into joint ventures with other people.
You could team up with someone else who doesn’t have that much money or maybe someone who is money-rich but time-poor. But you should always seek legal advice when entering into a joint venture.
Invest together and split the profits. This is another way of investing with a little amount of money.
Tip#4: Get experience in other investments
Being a successful property investor requires experience and it requires knowledge.
The investor can make an investment great. But an investor who has no experience and who lacks judgement can also take a great investment and make it a poor investment.
You can actually become more successful in property investments by getting experience in other investing areas.
Consider looking at other investment options if you don’t have enough money to get into property.
You can get into the stock market for as little as $500 to $1000. You could even look at investing in micro-business – things like websites that generate passive income.
Tip#5: Build a side business
My final tip is to build a business on the side.
This is exactly what I did because I am extremely young. I’m only 25 and I am a father of two. I didn’t have the time to build a deposit in order to invest in property straight away. So I decided to use some of my spare time to build a business on the side. I chose online marketing and built a myriad of websites on the side. These websites grew and generated me passive income.
I was able to move away from fulltime employment to working for myself fulltime in October of 2013. And while I’m not financially free I do now have the freedom to grow my own business rather than working hard to grow someone else’s.
Building a business on the side can increase your income. But more important are the skills that you can learn about investing in property.
Understanding cash flow analysis and financial statements and expenses is one of the hardest aspects of running a business.
But by juggling all these financial balls you actually become better at managing finances. You increase your understanding and ultimately become a more astute investor. And all of this can happen before you’ve bought a single investment property.
So there you have five tips on how to invest in property with little money. Improve your skills and improve your experience and you’ll find yourself in a strong position to invest.