Many Australians dream of becoming a millionaire and living a life free of financial worries.

One of the most popular paths to millionaire status is through property.

Most of the Australia’s richest either made their fortunes in real estate or invest their wealth in property.

They’re attracted to property for a number of reasons: strong growth potential, the ability to use other people’s money (leverage), the ability to add value, and Australians’ insatiable appetite for homes.

Becoming a property millionaire isn’t a fantasy. It is a goal reached by real, ordinary Australians all the time.

How do they do it?

The path to being a property millionaire requires hard work. But the process is simple.

Here are the five steps you need to take to build a million-dollar property portfolio.

1. Find your niche

What aspect of property do you enjoy most? What are you passionate about? If you focus on an area you love you’re much more likely to be successful. All the successful property operators have a niche: Harry Triguboff, for example, focuses on apartments through Meriton. A niche means you become at expert at one part of the real estate game, gaining a much-needed competitive advantage.  

What will your niche be? It could be renovating disaster houses, buying bargains, building new units or homes, or building a portfolio of cash-flow positive rental properties.

2. Save

Many say becoming a property millionaire is easy – even if you don’t have money. But most millionaires began by saving hard-earned cash. Saving gives you a deposit and enough to cover the costs of your first deal. The discipline of saving also helps you develop good money habits.

3. Start small

All property millionaires started somewhere – usually with one small deal. They took action – starting small launches you on the road to becoming a millionaire. It also allows you to learn, and perhaps make a few mistakes, without getting yourself into too much trouble.

4. Add value

Many property millionaires have simply bought and held on, riding the overall gains in the property market. That requires luck – you can’t control what the market is doing. What if you want a more certain path?

Your best bet is to add value to properties. The goal is to make your property more valuable. Adding value may be as simple as tidying up and painting a rental house, or as complex as fixing up major structural flaws in a house. When you add value you build equity in the house which can then be used to fund more property purchases.

5. Use other people’s money (leverage)

One of main reasons people become rich through property is using other people’s money – the use of debt. Leverage increases investment returns – significantly accelerating wealth building.

Say you buy a $100,000 property and put up a deposit of $50,000, borrowing the rest. If the property rises by 20 per cent you’ve made $20,000 – a 40 per cent return on your $50,000 deposit. That’s nice, but not amazing.

But say you bought the $100,000 house, and put up just $10,000 of your own money. This time you’ll have to borrow $90,000 – significantly more leverage. If the property rises by 20 per cent, you’ve also made $20,000. But the return on your investment of $10,000 is a massive 200 per cent. Those types of returns are the quick way to wealth.

Using other people’s money means you can do more and bigger deals.

 

Do your research! 

onthehouse.com.au offers property sales data for you to do your property research.

• Check out Listings and Latest Sales Prices in your area for FREE!
• Sign up for our Premium Reports to do some in-depth research on historical property sales.

 

Tags: Apartments, Borrow, Investor, Research, Units

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