Friday, 22 February 2008

7 Steps to Becoming a Property Millionaire, Prt 3 (Get A Deposit, Find A Great Deal)

Step 1: Get a Deposit

If you have an average paying job, or are self-employed, and can saved a deposit of say $30,000 that's usually enough to get started. Otherwise if you have your own house, can access this amount from the equity in your house. Many people starting out have used their parent's equity or guarantee.

Most property investors have completed dozens of property deals using none of their own money, so it can be done.

On a property valued at say $300,000 this would be a $30,000 deposit. Some lenders will lend a higher percentage, so you would need less deposit.

Before you start saying, "How the heck am I going to come up with $30,000??" I will show you how to get started with far less than this, using the power of leverage in the following posts. So read on.

Step 2: Find A Great Deal

You need to find a great property deal - one that will grow in value faster than the average, so that your wealth can grow quickly. You can learn to do this yourself by reading books, attending seminars and spend time analysing properties in a suitable area.

Or you can do it the easy way, find someone you can trust who can find a great property for you (and hopefully they won't charge you too much for their time and skill). The strategy proposed here uses the power of leverage to buy property off the plan.

What makes a great deal? It means a quality property, in a good suburb that has shown above average capital growth over the last 5 to 10 years, and looks stable enough to continue.

It is more likely to be a one or two bedroom unit or townhouse. A property that has a unique or scarcity factor (that is, not a unit in a large tower, or a house in a new subdivision, where more and more identical houses are likely to be built. It would usually be located within 5-12km of the city.

It should appeal to a target market of tenant who fits the following profile.
  1. Young professionals in the 26 to 35-year age group, generally have lack of time, and enjoy socialising and eating out, so need to be close to restaurants, cafes, public transport etc.

  2. "Migrating empty nesters" - those who are 50+ years old, looking for proximity to service and security.