The Short Answer: Yes, But It Depends On The Property
Property investment can be the most lucrative investment you’ve ever made, or one of your worst decisions in life. You’ve got to invest carefully, and avoid being undermined by the kind of people who make their living deceiving well-meaning but inexperienced individuals. 2019 is set to be an unpredictable year.
There are many who think 2019 is going to be great for housing, and just as many who think real estate will be questionable this year. Who do you trust? In Australia the consensus seems to be that housing in smaller communities represents a more firm investment than real estate in more metropolitan areas—at least according to AFR.com.
Likewise, it’s expected that 2019 will see a real estate market that is “cooling” in the United States. Here’s the thing: a cooling market doesn’t necessarily mean you can’t make money in real estate, it just means you’re going to have to re-evaluate your strategy.
Passive Income Generators
A “PIG” is a Passive Income Generator. That is to say, you get the “machine” rolling, and it provides you money on a recurring basis. This is easier to say than to do, but you’ve seen it yourself. An apartment complex is a PIG owned by a landlord with each tenant paying the lease fee on a monthly or semi-annual basis.
You can do exactly the same thing. Buy a property that five people can live in with relative comfort. Rent it out; maybe even live there yourself and pay a share of the rent. If you’ve got five people paying $700 a month on a property, that’s $42k a year. In five years, you can pay off a $200k+ house; even including some of the interest.
Say you find a low-value property in a market when real estate is on a downswing. You can buy that property and rent it out for five years until it’s paid off. At that point, even if it has eroded in its overall value by half, you now own it free and clear.
You can do one of two things: either keep it operating as a PIG for another couple years to overcome the value loss, or sell it outright and turn that money into a more secure property. Either choice can bring you a hefty payday; it just depends on which tactic best suits your present situation.
Getting Solid Advice
Investment advice by My Wealth Solutions can help you navigate some of these complicated investment areas. If you’ve got money to invest, it can be best to put that money to something right away. On the other hand, you may want to sit on it for a year or two more, until the market corrects itself.
Some investment advisors will lead you into purchasing sub-par properties in decent neighborhoods that just need a little fixing up. This is called “flipping” a house. If you can buy a home, do $10k worth of work and add $50k worth of value, that’s a $40k payday when you flip it. Two of those a year is $80k; enough to buy your own little cottage and turn it into a PIG.
Just because you have little investment capital doesn’t mean you can’t get some—it just means you need some direction to help you best maximize what assets you have. Whatever you do, it’s integral that you deeply research the market beforehand, and set aside some “mistake” money for yourself.
Before buying a $200k home with the intent of turning it into a PIG, buy a $50k cottage and see how that works for you. Worst-case scenario, you gain some life experience that you would have been able to obtain no other way. If you take your time, invest carefully, and accept the advice of professionals, you’ll likely see the ROI you should.