Many newbie investors simply buy property using any old strategy, and don’t even think about whether it will get them closer to their goals.
That’s a pretty good way to lose money.
And it’s how Nathan started his property investment journey. However, he managed to turn his portfolio around. He’s now enjoying several stable streams of passive income, all while living on another continent.
How is that even possible?
Let’s find out…
Looking at Nathan’s portfolio at the time, you’d have thought he was doing an outstanding job. He owned five properties, mostly in prime locations.
And yet, those properties lost Nathan a ton of money.
And that was because he negatively geared them. This means the expenses exceeded the income.
It’s true that many people use this strategy for tax benefits. The losses do reduce your taxable income. This strategy might make sense for people who have lots of income in the highest tax bracket and enough cash to sustain the losses. For others, not so much.
As a matter of fact, Nathan couldn’t even claim the deduction! Living in Dubai, he wasn’t required to pay tax in Australia. He could only profit after selling a negatively-geared property, assuming that it had accrued enough capital gain.
Hoping to find a better approach, Nathan joined the I Love Real Estate (ILRE) community.
To fix those costly mistakes, Nathan looked for a good property investment course. He needed something online, as he was living thousands of miles away.
One day, he saw an ad by Dymphna Boholt. He watched some of her videos and was immediately hooked. He got in touch with the team and started working with them.
Now, you might be thinking that it’s impossible to build a powerful property portfolio from another country. After all, isn’t there so much work you need to do in person?
Not for Nathan, who found a way to turn his properties around via phone and email.
As soon as he started, he realised the errors of his past.
When Nathan first joined ILRE, he had a negative cashflow of $33,000. Negative gearing was swallowing up all that money.
Changing strategy in midcourse, Nathan decided to sell the two properties that were bleeding the most money. They were in Cannes and South Australia. It was a wrench to let them go, but these properties were the sacrificial lambs that gave Nathan the chance to finally make money from property investment.
With the after-sale proceeds, Nathan renovated a beach house that he and his wife had bought a while back. The ILRE bootcamp had taught him a lot about how to profit from a buy-and-renovate strategy. He put what he learned to good use.
In the first nine months after the reno work, Nathan made $62,000 renting the property out on Airbnb. This first sweet taste of success got him hooked on positive cashflow.
Next up for Nathan was the transformation of a 4-bedroom property that he’d owned for 15 years. He converted it to a 6-bedroom house, also for rental. The highly successful renovation increased the property’s cashflow from $9,000 to $26,000!
Nathan made a few additional moves with his portfolio, with excellent results. He went from a negative $33,000 to a positive $56,000 cashflow in 13 short months.
Along the way, Nathan learned many valuable lessons. Here are three of them.
When Nathan first started investing, he was winging it the whole time. He probably would have figured out that negative gearing was a bad idea if he’d thought about it. He also failed to tap into his investment properties’ full potential. He rented them out without much thought or strategy.
He knows now that this was a huge mistake. Therefore, his advice to any investor is to make sure to have a clear goal and strategy in place before beginning. As soon as he got serious about his portfolio, everything started to go his way.
Before you start, think about what you’re looking to achieve. Forget about any one-size-fits-all strategies for building wealth – they don’t exist. Explore your options and choose the strategy that works best for you.
Nathan proved that it’s possible to build a high-performing portfolio, sight unseen and from thousands of miles away.
Throughout his journey, Nathan relied on technology to get things done. His phone bill once got up to $1,900. That was when he switched to Skype and worked on finding more cost-effective ways of managing his wealth.
With this in mind, there’s no excuse for giving up your quest to build your dream future. Where there’s a will there’s a way.
You may have noticed Nathan’s variety of strategies for his properties. Some of them were just holding him back. To fund the profitable investment properties, he had to sell the non-performing ones and cut his losses.
As you go about building your wealth, you might find yourself in the same situation. Don’t cling to the properties that aren’t taking you closer to your goal. Get rid of them so you can focus on more lucrative investments.
As you can see, you can’t just buy a property and hope to get rich. Nathan tried it, to his cost.
To become a successful investor, you must put a lot of thought into your portfolio. Always keep an eye out for new ways to get the most out of all your investment properties. You’ll be surprised by how much you stand to gain if you play your cards right.