Build Wealth in Real Estate With These 3 Proven Methods
Published 1:54 am 16 Jul 2021
The property market is a great way to build wealth – Here’s how to do it.
The rapidly spreading delta variant of COVID-19 has thrust much of Australia back into lockdown. However, Australia’s property market has continued to remain strong.
Auction clearance rates are holding up amid NSW’s ongoing lockdowns, the RBA has maintained its intentions to keep interest rates at record lows, and a stimulus package has just been announced for businesses and individuals impacted by the new restrictions.
In many ways, this year has provided some of the most favourable conditions for property investors in many decades. However, when we look at the long-term trends of the market, it is almost always a good time to invest in property.
Source: Investment Property-Melbourne
The Australian Property Market
The property market is considered to be a relatively safe investment as properties are always in demand due to Australia’s consistently growing population, making the property market less volatile than other assets and commodities.
Regardless of economic conditions or catastrophic events that have occurred in Australia or globally, Australia’s property market has managed to continue to thrive over the long term.
This is why nearly a quarter of the 200 richest people in Australia built their wealth through the property sector.
According to a report produced by CoreLogic and Aussie Home Loans, median house and unit values have increased by 412% and 316% respectively since 1993.
The report goes on to state that if this rate of growth continues over the next 25 years, “Australia’s national property values could rise to $2.9 million for houses and $2.1 million for units by 2043.”
Put simply, purchasing property is a great way to store wealth in an asset that will almost certainly appreciate in value, particularly as you build equity in your property.
Types of Property Investing
There are many ways to utilise the property market in order to generate wealth, with many Australians opting to hold property as it appreciates alongside the rising property market.
However, when it comes to generating wealth over the shorter term, property flipping is the preference for many investors.
Property Flipping is a form of property investing that involves adding value to a property through structural or cosmetic changes and selling it once you’ve completed the renovations for additional profits.
Property flipping can yield returns much more quickly than simply holding onto property and waiting for the market value to appreciate. However, unless you find a property that is below market value, you’ll have difficulty generating much of a profit through property flipping.
That’s why, here at DG Institute, we teach our students about three unique methods that help them to find an undervalued property.
Finding Undervalued Properties
It’s easier said than done to find a property that’s below market value, particularly if you don’t know what to look for. Here at DG Institute, we have proven methods of finding undervalued homes that have helped our students generate upwards of six figures in profits:
- Wholesale Deal
- Takeover Deal
- Short Sale
These three methods have allowed our students to find and secure undervalued properties that can be flipped for a healthy profit.
Latest Undervalued Property List 13th July, 2021
Now that you know how to find undervalued properties, it’s important to find out if property flipping is for you. That’s why we’ve listed some of the benefits and risks involved below.
Benefits of flipping property
- Flipping property can yield much faster profits than waiting for your property value to appreciate over time. When you purchase and hold property, it is a passive investment as you’re primarily generating value by paying off your home loan in order to gain equity in that property while hoping that the market will go up. By contrast, property flipping, it’s an active investment as you are creating value as you renovate.
- As you learn to renovate properties you will gain value-adding skills that will help you to accelerate future renovations, potentially saving you time and money with each property you flip.
- If you purchase an undervalued property prior to renovating it, you can have more control over your profit margins by doing sufficient market research and being strategic about how you add value to the property. For example, your renovations may be structural or cosmetic depending on the circumstance and what your desired result is.
Risks of flipping property
- Timing is critical when it comes to flipping properties. If delays occur due to unforeseen events, there will be increases in expenses that will eat into profits.
- If you are inefficient at renovating a property, you may make a profit, however, it may come after spending months on your renovations. For example, if you spend 2,000 hours renovating and sell your property, and you generated $20,000 in profits, you have essentially worked for $10 per hour. Without the right expertise, property flipping can be more trouble than it’s worth.
Property flipping case studies
Most recently, Sonya and Michael used lessons that they had learned at DG Institute to find an undervalued, off-market property in Katoomba and flip it for a very healthy profit of $206K within just 5 months.
The couple were flabbergasted to achieve these results, after predicting a much more modest $36,000 in profits:
“Our feasibility came up with $36,000 in profits, and we were happy with that. To end up getting $206,000…. We were knocked out.”
“Don’t sit on the fence. We did initially because of the fear of the unknown, but with DGI you have a great community and support network behind you, and the figures don’t lie.”
Another one of our students, Lynn, was able to find and secure an undervalued property in Nundah in Queensland and flip it for $46,000 in profit in just 91 days.
“I still look at [the deal] in disbelief. It’s an enormous amount of money. I flipped [the property] very quickly.”
These case studies highlight that when property flipping is done effectively in terms of time and expenditure, profits can be made quite quickly.
Lastly, one of our students Ursula was able to find an undervalued property in Maleny in Queensland, which she has now subdivided to be sold for a projected $375,000 profit.
You can find more case studies of property flipping success stories on our website here.
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