As a 20 year property investor, I’ve learned a few things along the way that may help others be successful in real estate investing. I’ve had great success and I started with little money and zero knowledge. Much of my success was due to luck but I paid attention, learned from my mistakes and learned what works more and what works less. I’ve never lost money in a real estate transaction, so it was all just different levels of success for me. In hindsight, I’ve identified a few things that a green investor with little money could focus on to maximize their return with very little risk.
There is an adage that the three most important things in real estate are “location, location, location.” There are many other important factors for real estate Investing but a person could be a successful real estate investor with little money and an understanding of the adage “location, location, location”.
For a young person, a simple long-term strategy for making money in real estate is to not follow the crowd. Instead of buying a cookie cutter house in a popular suburban neighborhood, focus instead on buying land. The formula for success in buying your primary residence, with financing, is to focus on the land and the location, not a big fancy house to impress your friends. The biggest ROI is usually in the land, not the structures. We can build as many houses as we need, but we cannot create any more land.
To maximize your success, you need to be living in a town that is growing. After you have accomplished that, figure out which way the town is growing and buy the largest piece of land that is the closest to civilization that you can afford. Having a structure on it that you can call your primary residence will likely help you with your financing. Things to consider:
- The structure can be replaced or improved so don’t focus on that.
- Buy a property that is in the direction of the fastest growth.
- Buy one with the most road frontage that you can afford.
- Access to utilities is nice, but they will eventually arrive with the growth.
- A view or a body of water is a valuable bonus.
- Buy the biggest property that you can afford.
- Buy as close to town as you can afford.
- Consider proximity to amenities, green space, markets, warehouses, transport hubs, freeways.
Following this simple formula and keeping the property for 20 years is almost a 100% guarantee to be your biggest return on investment with very little risk. The property is likely to be worth millions more than you paid for it and at the very least, it will keep up with or exceed the rate of inflation. It is also a useful asset and a great way to raise a family.