Most people investing in property want to create wealth quickly, but how do you actually achieve this?
The best way to do this is being strategic with your investing and learning how to 'manufacture equity'. Put simply, you want to increase the value of your asset so you're not just relying on the natural growth of the market, which can take years to see.
There are many different strategies you can implement to help you achieve this. Developments, renovations and subdivisions are the main strategies we use with our clients to help them accelerate the growth of their portfolios.
Developments
Focusing on small scale developments such as duplexes and triplexes are not only affordable for many entry level investors, but they can provide some really great results.
It's not uncommon to hear of $100k to $250k equity being manufactured within 12 months on projects between $600k to $1M, which is an excellent return on your investment.
Employing a buyer's agent that understands the development and construction process, can source suitable land and find a reputable builder, and cam project manage the entire process for you can make for an excellent investment which is both stress-free and profitable.
Renovations
The scale of renovations can vary from minor (cosmetic) to major (structural).
Minor reno's can include painting, flooring, window furnishings, light fixtures and updates to kitchens and bathrooms.
Major reno's can include structural changing such as removing walls to create open plan living, changing the configuration or layout of the property, to even doing an extension and adding more floorspace to the property.
In each case, it's important not to overcapitalise on your investment, which means that whatever you spend on the property, you want to see the value of the property increase by more than this amount - creating equity. As a general rule of thumb, we aim to add $2-$3 of value for each $1 we spend.
Subdivisions
This is a great strategy, not only to manufacture instant equity but to also give you future development potential. Subdividing a property means splitting the property into separate lots, which can either be developed on later or sold off separately to the original lot/property.
This process requires a lot of research and due diligence, speaking with council, town planners and surveyors to ensure the zoning allows for this and the lot meets council requirements (minimum lot size, slope for services, access etc).
Subdivisions can either be done as street frontage lots (if it's a corner block or a wide enough block), or as a battle-axe lot (behind the existing house with driveway access to the street).
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