Two things that’ll help you double your money in a few short years
You need to find incredible value
Value investing for property is no different to value investing in shares. You need to find an asset that is selling at a great price, for less than it is REALLY worth.
In the case of property you should look for two things, firstly its price should be lower than comparable properties in the same area.
Secondly the rental income you make from a property should be more than 10% of the property’s value each year.
You need to use ‘Other People’s Money’
Let’s face it – nobody gets rich by only investing with their own money. Even Warren Buffett wouldn’t have made it very far if he didn’t get money from investors to reinvest through his company.
So, instead of putting R500,000 into a property you only put R50,000 into it and get the bank to lend you R450,000. That way you don’t need a fortune to start out with but you still get to make money from a much bigger asset than you can own by yourself.
So how does this work? How do you apply this in practice?
Well, it’s simple – and I’ll show you how I did it recently so you can do it too…
If you want to double your money – start with this
You need to go out and look for a property. The easiest way is to look somewhere close to where you live yourself.
I prefer one or two bedroom apartments because I know there’s large demand for affordable apartments like this from young couples in the area I live in.
In my case I found a two bedroom apartment which I could buy straight from the developer. The nice thing with that is there are no extra fees like you’d have with any other property.
So, I negotiated a price of R550,000 on the apartment with the developer a year ago. I put in R50,000 of my own money and the bank gave me the rest.
I put a tenant in for R5,200 a month, meaning I get 11.3% of the property’s value in rental payments each year.
My interest expense on the property is roughly R4,000 per month, with levies at R450 per month. So the property pays for itself and then some every month.
Here’s where the effect of ‘Other People’s Money’ gets massive:
You see, after a year now the developer is selling similar sized two bedroom apartments for R630,000 each. The one I bought is bigger in fact. It sports 2 bathrooms and 2 car ports. While the other ones, being sold today, have only one of each. So we could argue the price I can get for it is slightly more…
But let’s stick with R630,000.
If I sell this property today, paid back the bank what I owe them and pay the estate agent a commission of R20,000 it means I’d be left with R110,000 after putting in only R50,000.
That’s a profit of R60,000 – or 120% in a single year.
If the property’s price goes up at a slower pace than it did in the first year over the next year and it sells for R680,000 after two years it books me a profit of around R110,000 or a return of 220% in two years.
That’s the power of ‘Other People’s Money’!
And, while I’m waiting for the property to grow in value someone else is paying back the loan I’ve got with the bank.
If you’d like to know how to find deals like this, or maybe how to buy a property using ‘Other People’s Money’
even when the bank won’t give you a loan make sure you keep your eyes peeled. I’m working on a project to help prospective property investors like YOU to gain all this knowledge as fast as possible!
Because the fact is, anyone can find deals like this. Double their money in a year or even less. And you can do it with very little risk on your part…
Here’s to unleashing real value