In the second part of this article on how to become a
millionaire in just five years, I'm going to cover LANE #3
- PROPERTY INVESTING
While many wealthy people have made their cash in business,
as many have made their money in property, and many
business people put their money into property once they
have sold their businesses.
Why? Because property is not such hard work!
In the same way that you have two ways to make a million in
business essentially, you have two ways to make a million
in property, within five years.
Actually, there are SO MANY ways to make a huge amount in
property - like buying, renovating and flipping - but most
of them incur capital gains tax whcih will make my sums
harder, so I'm going to concentrate on the simplest and
most tax efficient methods.
To make (and keep) $1 million in property in five years,
you could work out that you need to create $250,000 rental
profit per annum, net of tax, or $416,666 per annum gross.
That's $34,722 per month.
If you work out that a good rental profit on a small condo
or family unit is $200 per month, then you can see that you
need 173 rental units to achieve your goals.
An easier way is to create a property portfolio that
appreciates in value by $250,000, per annum, which you can
periodically refinance to pull out your equity, tax free
(it's not earned income you see, so not taxable).
If you figure that property appreciates in value by 10% per
annum on AVERAGE, which means that some years it will do
better, some years not so well, but over time, 10% per
annum is reasonable for most of Europe, the UK, the USA and
I believe most urban parts of Australia.
So in order to own a property portfolio that will
appreciate by $250,000 per annum and that's 10% then yes,
you've guessed it, you will need $2.5million worth of
property.
And before you tell me that this is impossible, let me tell
you about my great friends Greg & Andy, who took
£10,000 on a 0% credit card, bought property under
market value, did it up a little bit, revalued, refinanced,
pulled their deposit back out and went again, which enabled
them to build up a £37 million (that's pounds NOT
dollars) within just 10 years.
You can read Greg & Andy's story on our blog.
They can pull out £3.7 million per annum, tax free,
but it gets even better than that.
Do the sums for yourself because every year, the
compounding effect kicks in, and every year, their
portfolio is growing exponentially, and so then is their
available income every year.
One way to make money from property without even owning any
(great for people without a deposit, who can't get a
morgage or who's credit rating isn't great) is to educate
yourself about what makes a great property deal and then go
and find those deals and then sell them onto investors with
money but no time.
Another way is to find people who HAVE to sell, offer to
buy their property at a future date at today's full market
value, then find people who can't buy now but who can in
the future (perhaps they are new to the country and haven't
built up a credit rating yet) and then strike a deal
whereby the future owner moves in and rents the property,
but has agreed to buy it for todays price, but in two years
time. You make money from both deals and often an income
at the same time. We go into this in much more detail on
the blog.
There is another way to buy property - guaranteed 405 or
50% under market value. This is not an income strategy in
the short term but it could certainly make you a property
millionaire within five years.
I hope I've fired you up about the possibilities for
becoming a property millionaire - there are just SO MANY
ways to make money from property.
If you would like to read about Lane #4 - The Internet then
look for Part #3 of this article.
----------------------------------------------------
Nicola Cairncross
Wealth Coach, Speaker, Author &
Founder of The Money Gym
http://www.TheMoneyGym.com/Blog
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