This is the wrong way to do it.
How do you make money in property?
If you listen to the media, or your uber driver, or the flashy marketers selling over-priced off-the-plan apartments, making money in property is easy.
Buy a property. Wait for the market to go up. Sell for a profit.
So easy.
But as someone who effectively runs a property investing university, I’m here to tell you that this is the kindergarten-level view of property investing.
It’s not wrong exactly. But it misses a lot.
And what it misses is important.
The thing about this strategy – we call it the ‘buy and hold’ strategy – is that it is completely dependent on the market.
That is, once you buy, there is literally nothing you can do but sit back and hope – and I want to stress that “hope” – that the market goes up.
More often than not the market does go up – in Australia over the past 30 odd years or so at least.
But not all the time. Markets will often go through soggy patches. Some specific suburbs will get overbought and fall. (Some sea-change suburbs are still 40% down on their post-pandemic highs.)
And maybe that’s ok. Maybe you just ride it out and wait patiently for the market to go up.
But if you’re over-leveraged and negatively geared, you’re bleeding cashflow and you just might not be able to ride it out.
You are forced to sell and usually forced to sell at a loss.
“Buy and hold” is definitely the easiest way to lose money in property.
So if that’s the kindergarten view of property investing, what do I teach at university?
The key take away is that there are dozens if not hundreds of ways to make money in property, and almost all of them give you more control over your investment than a simple ‘buy and hold’.
Maybe you change the nature of the land by getting a rezoning through. Maybe you get more yield out of a parcel by subdividing it.
Maybe you add value by building a granny flat, or maybe a dual occ.
Maybe you bundle a few parcels of land together and go for a full 24-lot subdivision and development.
In all of these strategies, you’re in control. How much profit you make isn’t up to some faceless ‘market’. It’s up to you.
Perhaps this is why people don’t want to know about it. When your profit is your responsibility, that’s a little bit scary.
It’s easier to throw up your hands and just leave in the hands of God… or the market.
But this is not the way to build wealth through property. And it’s definitely not the way to replace your income and create financial freedom.
To do that, you have to take charge.
You have to make things happen.
You have to make great things happen.
DB