Sunday
Make money, invest in property?
Posted by ResInvest
In a recent blog I opened the debate - which is a better investment – property or shares?
Of course, this is an age old debate with both sides pretty entrenched in their views.
I concluded by saying that if you were still not convinced I would give you 11 reasons why property is a great investment and that's what I'm going to discuss today.
Now let me just say that although I see property as the easiest way for the average person to become wealthy over time, not everyone who invests in property is successful. However property has been the way most people have created the majority of their wealth even if it was by purchasing their family home.
Before I continue, just a quick note that we do a monthly newsletter with properties to consider as well as specific current property investment advice and tips. You are welcome to see www.resinvest.co.za and register.
Let's look further into some of the reasons why I think you should consider getting involved in property as the new property cycle rolls out around the world.
1. More millionaires have been created through property than any other form of investment.
Remember, there's nothing wrong with seeing what successful people do and applying those principles to your own life. If the majority of extraordinarily wealthy people have used real estate profitably, there is no reason why you shouldn't also.
Remember, there's nothing wrong with seeing what successful people do and applying those principles to your own life. If the majority of extraordinarily wealthy people have used real estate profitably, there is no reason why you shouldn't also.
2. Anyone can do it
Property investment is not just for the wealthy. It doesn't really take large sums of money to get involved in real estate. This is because banks will lend you up to 80% against the security of residential property, which means that most Australians with a steady job and a little capital behind them can afford to buy investment properties.
Property investment is not just for the wealthy. It doesn't really take large sums of money to get involved in real estate. This is because banks will lend you up to 80% against the security of residential property, which means that most Australians with a steady job and a little capital behind them can afford to buy investment properties.
It has been shown over and over again that careful and intelligent use of real estate can enable ordinary people, like you and me, to become property millionaires in about 10 years. If you truly intend to become one of the wealthy people in the future, you should probably take a serious look at using property to your advantage.
3. Security
It's often said that residential real estate offers the security of 'bricks and mortar', but let's take a closer look at why I believe it's one of the safest and potentially most profitable investment markets in the world.
It's often said that residential real estate offers the security of 'bricks and mortar', but let's take a closer look at why I believe it's one of the safest and potentially most profitable investment markets in the world.
You never hear of houses 'going broke' do you? But lots of companies have gone broke. Even companies previously considered blue chip have gone broke. Yet even allowing for the ups and downs of real estate values that we hear about, the underlying trend of property prices in the major capital city residential markets has been steady growth.
You don't have to believe me when I say that residential property is a secure investment. Just ask the banks. Banks have always recognised property, and especially residential real estate, as an excellent security. The reason they'll lend you up to 80% of the value of your property is that they know property values have never fallen over the long-term. In fact, the entire Australian banking system is underpinned by the continual growth of residential property.
But the really special feature of the residential property market is that owner-occupiers, that is people owning or paying off their homes, own about 70% of these properties.
This means the majority of the market in which we invest does not act according to normal investment criteria or motivation. If times get tough the majority of homeowners don't panic and rush to sell, as can (and did) happen in other sectors such as the sharemarket. So while property prices do fluctuate over time, affected by supply and demand, the large homeowner market will always underpin property values.
Another factor that adds to the security of residential property as an investment is that you can insure it against most risks. You can insure the building against fire or damage and you can insure yourself against the tenant leaving, damaging your property or breaking the lease.
4. Income that grows
The rental income you receive from your investment property allows you to borrow and gain the benefit of leverage by helping you pay the interest on your mortgage. Over the years the rental income received from property investments has increased at a rate that has outpaced inflation.
The rental income you receive from your investment property allows you to borrow and gain the benefit of leverage by helping you pay the interest on your mortgage. Over the years the rental income received from property investments has increased at a rate that has outpaced inflation.
Will this continue in the future?
Well, statistics show that the level of home ownership is slowly decreasing. There are a number of reasons for this but, in particular, as property prices keep rising, fewer people are able to afford their dream homes. This is compounded by higher rentals meaning that many first home buyers have been hit with a double whammy - making the great dream of owning a house just that for many - a dream.
We know that the government is having difficulty providing public housing, which means there will be plenty of opportunities for landlords to make good money in residential property investment, particularly if you own a property that will be in demand by tenants of the future.
5. Consistent capital growth
Good capital city residential property has an unequalled track record of producing high and consistent capital growth. Over the past 25 years the value of the average property in all capital cities has doubled in value every eight to 10 years. However, in the short-term the picture is much more uncertain and confused, and at times capital growth stops and even reverses, as we saw in the early 80s, the early 90s and in some areas in the most recent slump we experienced in 2008.
Good capital city residential property has an unequalled track record of producing high and consistent capital growth. Over the past 25 years the value of the average property in all capital cities has doubled in value every eight to 10 years. However, in the short-term the picture is much more uncertain and confused, and at times capital growth stops and even reverses, as we saw in the early 80s, the early 90s and in some areas in the most recent slump we experienced in 2008.
While all our capital cities growth have averaged growth of around 8-10%, compounding each year over the last 25 years, these are just averages. The better your property selection – where you buy, what you buy, how well you negotiate and how you finance your property investment – the better your returns could be.
6. You can buy it with someone else's money
Sure you need some of your own money – I don't believe in nothing down deals, but the ability to use leverage with real estate significantly increases the return on your investment capital and, importantly, it allows you to purchase a substantially larger investment than you would normally be able to.
Sure you need some of your own money – I don't believe in nothing down deals, but the ability to use leverage with real estate significantly increases the return on your investment capital and, importantly, it allows you to purchase a substantially larger investment than you would normally be able to.
7. You are in control
Property is a great investment because you make all the decisions and have direct control over the returns from your property.
Property is a great investment because you make all the decisions and have direct control over the returns from your property.
8. Tax benefits
Property investors are able to take advantage of a range of tax benefits including tax deductions and depreciation allowances. These are too detailed to mention here.
Property investors are able to take advantage of a range of tax benefits including tax deductions and depreciation allowances. These are too detailed to mention here.
9. You can add value
There are hundreds of ways you can add value to your property, which will increase your income and your property's worth.
There are hundreds of ways you can add value to your property, which will increase your income and your property's worth.
10. You don't need to sell it
Unlike most other investments, when real estate goes up in value you don't need to sell in order to capitalise on that increased value. You simply go back to your bank or mortgage broker and get your lender to increase your loan.
Unlike most other investments, when real estate goes up in value you don't need to sell in order to capitalise on that increased value. You simply go back to your bank or mortgage broker and get your lender to increase your loan.
11. Most forgiving
Even if you bought the worst house at the worst possible time, chances are that it would still go up in value over the next few years. History has proven that real estate is possibly the most forgiving investment asset over time. If you are prepared to hold property over a number of years, it's bound to rise in value.
Even if you bought the worst house at the worst possible time, chances are that it would still go up in value over the next few years. History has proven that real estate is possibly the most forgiving investment asset over time. If you are prepared to hold property over a number of years, it's bound to rise in value.
There's really no other asset class quite like property. And with a new property cycle working its way around the world I believe you should catch the property wave too.
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How to make money online. Pure and simple
So you decided to investigate making some money online ?
Or you want to jump right into it ? Need Extra Cash ?
Doesn't matter who you are, if you are 18 or 60, rich or poor, this page is for YOU !.
After years of struggling to make a decent living online, I finally succeeded, and my online income now exceeds my expenses threefold on a bad month. So I am financially Free. I still work, and darn hard most of the time, but I now have time for myself, and the things I enjoy when I want it. And if I really want I can take a month off without affecting my income. I work hard now not to pay bills but to make sure I reach my six figure income goals.
So lets not waste any time and get started.
Lesson 1 - The Basics
You must have heard about ecommerce and the Billions of Rands that are being spend daily. Well you can have a slice of that pie.
Most multi million Rand generating websites sell something. But you don't want to do that.
Why Not ?
Unless you have lots of capital for Stock or Shares, Staff, Designers, Marketing, rent a warehouse, setup distribution contracts, and run a big company then it is simply out of reach to most people. These companies in most cases get their sales from people like you and me. This is called affiliate marketing. You put in a bit of time and effort, and refer someone to these companies, they make the sale, ship the item, or supply the service, you have to do NOTHING after you referred someone to them. They do the work, you get a commission.
To let you know who works this way here are some good earners in my portfolio that use affiliate marketing : Liberty Life, OutSurance, Dial Direct, Barclays, IBO Home Loans, Intersoft, Netflorist, Woolworths and thousands more.
I currently earn in excess of R22 000 per month from the above businesses and they are doing all the work for me. From lead follow up to sending flowers.
Lesson 2 - How to get these companies to make me money.
Well many websites have links where you can sign up to their affiliate programs, but this becomes time consuming. You have hundreds of websites and usernames and passwords to remember. I hate Work. Work Smarter and not Harder.
So why not have one username / password where you can link to multiple companies and income streams. You can. !
Sign up at OfferForge South Africa - They provide you one interface to earn money from : Reebok, Europcar, BidorBuy, DialDirect, Net Florist and many more.
Once you signed up read further...
You now have access to the TOP South African companies who makes LOTS of money for their affiliates from one single interface.
Take your time, read the "Getting Started" section, and familiarise yourself with the website.
Lesson 3 - Choose a winner and promote it.
Choose a winner and promote it. you will now ask how the heck can you do that.
My start-up advice is trial and error. To start out I would suggest Netflorist, as they are a well established brand, and don't require monthly premiums like insurance companies, and their products is very good.
Using the "campaigns" Menu option you select what company you want to promote and can choose the links you use to promote it. You can choose from a Text link, HTML link that converts to a picture or advertising creative when displayed.
When someone clicks on the link it will go to the OfferForge tracker (used to record the referrer for commission payment i.e. you) and then redirect to Netflorist. If the person that clicked on the link buys something from Netflorist you get commission (10% in the case of Netflorist) and they handle the billing and delivery, you did actually nothing, they did all the work.
Start by putting Netflorist in you email signature, or email your friends with your link, BUT DO NOT SPAM
Lesson 4 - Advanced promotion
Now you know how it works, and can start promoting your chosen affiliates even more. You can put your links in newsletters, on your blog. website, on your friends website (With his permission of course). Now you know how it works, and that someone gets money when you click on an online advert on any website.
Lesson 5 - Google Adwords
Personally I like Google Adwords to buy my clicks. With Adwords you only pay for clicks on your link, and not for ad impressions (views) so if my ad is seen 1000 times and only 3 people click on it I only pay for 3 clicks. You also get to set the price you are willing to pay per click. Setting a high price will ensure lots of clicks, but little to no profit, as all your income will be used to pay for the clicks. Setting it too low will result is very few clicks, and almost no exposure.
I started my Netflorist campaign with 5c per click and a few keywords. (A keyword is something a Google user search for) Over time I added in excess of over 300 keywords, and raised my price to 6c a click to get more exposure.
A tip :
Don't use keywords not relevant to the product company being promoted, as this will result in lots of views but little clicks.
"flowers, bouquet, flower delivery, interflora, gifts" are good keywords for Netflorist, since someone searching on Google for any of those terms are more likely to click on a Netflorist ad and buy flowers than someone searching for car parts and seeing a Netflorist ad.
It is a balancing act, and this is where the work comes in, you have to monitor your keywords, remove the non performers, add better performers, adjust your bids for clicks so you get lots of good quality clicks, that generate you money. Once a campaign makes me constant profit for three months in a row I change my daily budget to unlimited, since I know my keywords, and click bid combination earns me a constant profit, so unlimited budget = unlimited profit. Remember to still monitor your good earners at least once a week, as you need to take action should your profitability situation change.
Another Tip :
With adwords you can select the target region. Make sure it is set right, for Netflorist you only want South Africa as they only deliver in South Africa. No point in paying for American clicks to a website not delivering flowers in America.
Lesson 6 - Never Give up
What if your first try didn't make you money ?
Well try again with a different product. refine your system, learn as much as you can, Knowledge is power, and you don't need money to make money, just some intelligence.
Change your strategy, change your product, change everything, or only one thing. Sometimes the difference between a super earner and a loser is one cent in Google Adwords.
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This article was posted by Karen McGrath - thanks Karen, great post
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