To rely solely on market gains for equity from your property is cutting yourself short on your journey to reaching financial freedom. Why not be more aggressive in your wealth creation strategy and aim to create instant equity from your property?
At Bolt & Hunter , we share our industry knowledge and expertise with you to help you start a successful investment property portfolio. Our strategies have helped many Australians generate an almost instant profit from their investment.
Creating instant equity is never guaranteed and it doesn’t necessarily happen overnight. This approach can be perceived as a ‘risky move’. Sure, it takes planning and work, and maybe a slight appetite for risk too. But it is achievable – you can create equity faster than you think.
Let’s look at some of the way’s you can make it possible.
We all love a bargain. But it’s important to know and recognise the difference between a cheap property and an undervalued property. When acquiring property as a part of a wealth creation strategy, you need to look for the property with the best value, not the lowest price.
When it comes to cheap ‘pre-owned’ properties on the market, you may be spoilt for choice. But not without reason. A cheap property is just a property nobody wants to buy. Rather look for a property that is listed below its intrinsic value. Or enlist the help of an experienced buyer’s agency to help you negotiate it below its intrinsic value! Either way is a way to create instant equity from your property.
A motivated seller is a homeowner who is needing to sell their property rather than wanting to. There may be several reasons for a seller motivation, for example a change in financial or personal circumstances.
As the saying goes – if you can find people with problems, and solve those problems, you will do well. Motivated sellers aren’t after the best price they can get for their property. They’re after the price they can get from their property.
Generally, they want to move the property as fast as possible. They're open to negotiation, which if done right, can help you create instant equity from your property.
‘Supply and demand’ is a fool-proof, age-old principle that can help you create equity, and fast! There are three steps involved in using supply and demand to your advantage when building an investment property.
You need to find an area that has an undersupply of a certain property type. You then need to design and build a property that caters to this undersupply. By doing this you can create instant equity from your property merely from supplying what there is a lack of.
Building a family home on a parcel of land in a suburb that lacks in a.) family homes and b.) vacant plots is a simple example of how to do this.
Location, location, location! If you can get your hands on the worst house in the best street, you may have just hit the equity jackpot.
Refurbishing a property to bring it closer to the level of value of other houses on the street has great potential for creating profit. Let’s say you buy a property for $500,00 in a well-developed suburb and spend $150,000 in renovations. The refurbishments may increase the property value to $750,000. This generates $100,000 in equity.
Significant refurbishments, especially those that are structural can take time. But compared to more conservative methods of creating equity, this is a good way to do it quickly.
By making improvements to a rundown or out of date property you can create instant equity in several ways. You can increase your rental appeal and yield, and depreciate allowances, for example. But the most important equity creating factor here is that you can increase the actual value of the property... if you get it right.
Small cosmetic tweaks that add value to the home rather than just make it look better are key. The general rule of thumb is to not spend more than 10% of the total property value on these renovations.
Aiming for strength in numbers is another way to create instant equity. Think family, friends, work colleagues or just other people you’ve met through your life. Join forces with them and increase your bargaining power.
You can do this by becoming part of a property investment syndicate, or simply by rallying interest amongst people you know. This is especially true in development – if there is a way for a property developer to move several properties at the same time, you will have their full attention.
It is possible to create instant equity. And there are property deals readily available that can make it happen. If only it were as simple as it sounds though, right?
Investors need to be ready to do extensive research and due diligence to uncover the deals that will drive instant equity. If you’re looking for an investment property and want to create instant equity from it, Bolt & Hunter can help you.
Contact us to see how we can level the playing field for you.