For many people, becoming a millionaire is a major aspiration. And these days, there are a few ways you can try to achieve this goal. However, the most popular option has to be by investing in real estate.
This begs the question – can you actually become a millionaire through real estate investment? And, if so, is this achievable for the average person?
The short answer is yes, real estate can make you a millionaire. But before you start dreaming about your new lavish lifestyle, there’s an important caveat here. Building serious wealth through real estate takes careful planning, plenty of patience, strict discipline, and a lot of research.
The good news is, there are a few tricks to making the investing process a little easier.
Our tips on making millions throughreal estate
While there is a range of reasons investors get into real estate, making money is usually the primary goal. And while there are no guarantees,there are a few things you can do to boost your chances of success:
· Develop a positive relationship with debt: While we’re generally taught that debt is a bad thing, it’s critical to succeeding as a real estate investor. As such, it’s important to understand how debt works and the different ways it can be used to build wealth. You also need to know the difference between bad debts (ones that cost you money) and good debts (ones that make you money).
· Focus on growth areas: Capital growth is the Holy Grail for successful real estate investors and is the key to growing your portfolio. As such, it’s important to do your research and identify properties that have the potential to increase in value.These will often be in more expensive areas, and you may need to get creative to be able to afford them.
· Consider alternative investing approaches: Building on the previous point, it’s important to understand that there’s more than one way to invest in real estate. The traditional approach of spending years saving a large deposit before getting into the market is inefficient and,often, ineffective. As such, it’s worth considering other methods, like Investn’s unique co-investment approach which allows you to get started with just $15,000.
· Play the long game: Asa general rule, property is a long-term prospect, and becoming a millionaire through real estate investment takes time. As such, you should be prepared to hold each investment for several years to allow it to increase in value. You should also have a clear strategy for how you will use your short-term rental income to continue growing your portfolio.
· Make sure you understand your tax obligations: While you cannot legally avoid paying tax on your investment returns, there are ways to reduce the amount you owe. Understanding these and coming up with your own tax minimisation strategy should help speed up the growth of your portfolio. It’s also worth doing your research and checking if you’re eligible for support through any government grant schemes.
· Target renovation projects: One of the best ways to maximise capital growth is by focusing on properties that require some updates or repairs. Such properties can allow you to add a lot of value in a relatively short space of time. But you need to carefully manage your budget as it’s easy to over spend on renovations and eat into your returns.
· Balance your portfolio: Whilereal estate is a fairly safe investment, there’s still a level of risk involved. This is mostly because property performance will go through peaks and troughs as the market moves through its cycle. The best way to minimise the impact of this is to diversify your investments, buying different property types in different locations.
· Build your investment team: Behind every successful real estate investor is a team of professionals guiding the mand pushing them to keep growing. From solicitors and accountants to agents and buyer’s advocates, there are plenty of people who can support your investment journey. And having a list of experts you can call on as required should make growing your portfolio quicker and easier.
Want to discuss this further?
We hope these tips have given you a sense of what it takes to become a millionaire through real estate. If you’d like more information on this or need assistance starting, or growing, your portfolio, give Investn a call. We specialise in helping everyday Aussies break into the market and secure their financial future through real estate.