Can you grow your equity fast on a low income?
The basic human need for housing all but guarantees that investing in bricks and mortar will continue to be a popular method of wealth creation. If you’re on a low income the property market can be daunting, but there are still strategies that you can utilise to build wealth.
The number one thing to remember is that creating and accumulating wealth in property comes down to the time spent in the market. Successful investment is about getting the right property at the right price and in the right location and then holding on to it or adding value.
If you’re looking to boost your equity in a hurry, a property with the potential to ‘add value’ through development or renovation is one of the best options.
While the costs of carrying out a small development might push the subdivision option out of reach, home renovation done carefully can rapidly boost cash flow and improve the quality of potential tenants. However it can be easy to overcapitalise, so be sure to do comprehensive research and stick to your budget.
A good way to update an investment property’s look quickly and cost-effectively is to look at worn or unattractive features that can be easily fixed, such as floor coverings and light fittings. Keep renovations simple and watch out for costly works, such as hidden plumbing repairs, that don’t add any appreciable value to the property.
You may need to look to the outer suburbs to find a suitable investment as the inner suburbs and traditional hot-spots move out of reach.
Targeting properties further from the city, but with easy access to shops, transport hubs, parks and entertainment options which appeal to tenants can be an effective way to get your foot in the door with property investing. In most capital cities, houses near the CBD are almost out of reach of the average investor.
If you are willing to look further afield, you will generally find more options in terms of houses suitable for adding value, or with the additional potential of proposed rezoning.
Historically, Perth suburbs in the earlier stages of proposed rezoning have enjoyed relatively stable and comparatively lower prices to suburbs already zoned for development. However, as the proposed rezoning creeps closer to coming into effect, demand increases rapidly, dragging up property values with it.
If you are able to purchase a property to buy and hold in one of these potential rezoning areas, you have the opportunity to either hold until your equity allows you to carry out the development yourself, or bank the land to sell to a developer when the market has lifted.
No matter what your income, being patient and having a carefully considered investment plan is vital. Seek professional advice to help clarify your property investment goals and determine which strategies will work with your finances. Looking to ‘get rich quick’ is a gamble. Effective property investment is not.
If you have an interest in building your wealth through property, then call us on (08) 9381-7450, or request a FREE Starter Pack.