Learn what strategy works best and the top 3 common mistakes to avoid
Thereโs a tonne of information out there about real estate. Itโs hard for a beginner to understand what to do and who to listen to.
Before we get to the 3 ways to make money from real estate, I want to share a strategy Iโve used over 2 decades in the industry. Iโll then share 3 great ways real estate rookies can make money.
And finally, Iโll give you a heads up on the typical mistakes Iโve made and Iโve seen others make in real estate.
What strategy is good for beginners and why?
Positive cashflow strategy is best. This is where the property earns more rental income than the mortgage and other costs.
Think of your income from your job. And costs you need to pay for every month such as food, utilities, going out, holidays, petrol, and more.
If you earn more than you spend, youโll have money left in your pocket. Savings. Thatโs positive cashflow.
The same applies to property. If your rental income covers your costs, you have positive cashflow. Itโs as simple as that.
3 proven ways beginners can make money
1. Buy an off-market property at a discount
Find sellers who are keen to sell an off-market property. Theyโre not easy to find, but theyโre around if you know how to find them.
Old properties always have issues that can be used to negotiate a lower price. Before doing that, you always make sure the property is structurally sound and in a great area, amongst other things.
Thatโs how you make money as soon as you buy. You donโt need to wait years for its value to increase. You make money as soon as you buy.
2. Do a small cosmetic renovation
There are 5 renovations we recommend to increase a propertyโs selling price for our customers. These include the bathroom, changing carpets, and repainting.
You need to buy the property at a decent price to make it worthwhile.
3. Appreciation
In time, if bought right, the property will increase in value. Consider aspects such as:
- Land size
- Location
- Type of demographic
- Neighbourhood
- Amount of amenities
- Proportion of owners vs renters in the area
- Schools, hospitals, shops, and infrastructure
- Future development
- Interest rates
- Zoning regulations
The top 3 mistakes beginners make in real estate
1. They get too emotional
Many beginners get too emotional when buying and end up paying too much. Much more than what itโs worth.
Stick to your number and donโt pass it. Ask a partner or friend to stop you when youโve reached your limit.
Key takeaway: Use your head and not your heart
2. They donโt do due diligence on the property
Make sure you always ask for a building and pest report on your contract.
That way, if thereโs an issue, like termites, you can back away and get your deposit back in full.
Key takeaway: Do your due diligence on the property.
3. They donโt arrange financing early
Iโve had some clients fall into this trap.
Some people pay deposits on a house before contacting the bank, thinking there will have no issues getting finance.
Then they realise they canโt borrow what they thought they could – and lose their deposits.
Key takeaway: Do your due diligence on the property.
In a nutshell: Proven ways beginners can make money from real estate
Buying property can be complicated. Yet you can fast-track your knowledge and make money faster if you follow a few proven tips weโve learned over the past 2 decades:
Get an off-market property at a discount
- Do cosmetic renovations
- Get a property set to appreciate
Do all this with positive cashflow and donโt make the typical rookie mistakes. Make sure you use your head not your heart. Do your due diligence. And get financing early.
Thatโs how you can make money in real estate as a beginner.
If you need a hand finding the right property, give us a yell.
Contact us for your free, no-obligation, 30-minute consultation.
