Property Investment Strategies
Welcome to property investing! Property is such a large topic it really does need its own dedicated area at FIRE Panda Family. Personally I love property as it was how I first got into investing and starting my FIRE journey. You can see property, touch it, improve it and generally goes up in value over the long term if bought in the right location.
Renovating & Flipping
This is basically where you buy a property and renovate it to improve its value and then on sell it for a profit. Generally this works best in a high demand housing market. You need to be careful with this method to not over capitalize on renovations as this can quickly eat into any profits by selling the home.
If your a handyman or lady that can do the renovation work yourself, this method could work for you as this will increase the profits you make when you do sell. Make sure to also budget in any extra costs like stamp duty, agent fees, interest paid and research what prices similar homes are selling for in that area.
You can also do this using your own property or an investment property. Using your principal place of residence has advantages in that you don’t have to pay stamp duty and no capital gains tax.
Sell the backyard?
A low risk way to make some serious cash is to sell your backyard if you don’t need such a big space or are downsizing. Blocks of land ranging from 250sqm to 300sqm can sell for $200k to $300k depending on your area. Make sure your land has been zoned correctly so you can subdivide and sell it off. You can also check your homes current zoning with your council’s online mapping systems or give them a call.
The Granny Flat
Cant re-zone? Not much capital? No worries, super granny flat to the rescue. If you have a good sized backyard and want a source of extra income this option maybe for you. A granny flat is a self contained unit which can have 2 bedrooms, living, kitchen and bathroom all in one tiny package. They can cost anything from 120k to 200k depending on the size and what you require. They can generate roughly $170 to $250per week depending on your location etc. Again research your area to see what other people are charging.
Develop your own existing block
This option lets you build a house on your land, with a complete subdivision process and free standing house which can be rented or sold off as you please. You could either live in the newer house and sell the front or keep both and rent one of them out. Make sure you have enough equity in your house or other assets so you don’t have to pay Lenders mortgage insurance. Generally 20% deposit of the loan amount is required.
Dual Key Homes
This option is like turbo charging all the other options. For example you buy a piece of land, instead of building a normal house on it, you build a dual key property. This is basically a house within a house, each house is smaller but the added benefit is you get 2 income streams instead of 1. Make sure to check with your local council or builder that dual key homes are allowed in your area, and meet any conditions that might apply.
It seems everyone is getting on the Airbnb bandwagon. This is where you rent out your room or house to short stay tenants. If your house is in a good or unique location such as the beach, transport hubs or tourist destinations then it can definitely be an option for you. The starting costs are very low and the returns can be very good, guess there is a reason why so many people are on Airbnb these days.
Renting Room by Room
This is not for everyone but an option is also to rent a homes rooms individually to separate parties. This can work well if you have a house next to a university etc. It can be difficult in finding tenants for each room and also takes more time in managing each party but the benefits can be generating more rent from the one house.
Apartments or Units
This option is there for people who don’t want to buy a house or don’t have enough of a deposit for larger homes. Some apartments offer fixed rental returns, but also come with strata fees. They can also have lower capital growth due to no land component. If you have a block which you can build units on it then it could be attractive for you with many revenue streams. Beware of high capital costs as well as meeting building, parking and council requirements.
Now your in the big leagues, with this option you have purchased a commercial space, restaurant or office etc. There is high rental returns on offer depending on where your commercial space is and size. Many costs are passed to the tenant, such as power, water, renovations but you need to find one as well as have a solid commercial property manager working for you.
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