I have read many property investment books over the years and my biggest problem with them is that most of them assume that you already have loads of cash to buy the property that will make you heaps of money.
How can you invest in properties if you don't even know how to accumulate enough money for a deposit efficiently?
In this post I wanted to focus on helping you to get your first or your N'th property by discussing the various ways you can have your deposit ready.
Inheritance >> It sounds obvious but you would be surprised by how many people spend their inheritance on non-wealth generating assets, such as cars, holidays, boats, etc.
Win the lotto >> If you are banking on this then you are wasting your time here.
Illegal activities >> Unfortunately it is one option but I strongly discourage you from going down this avenue.
Work hard and live like a monk >> This is certainly a viable option for a young single but once you get older and have family then this could ruin your relationship with your loved ones and lead to an unhappy life. You must always maintain the right balance between working hard, keeping your expenses under control and spending enough quality time with your loved ones.
Study more, get qualifications >> Being highly qualified can certainly lead to higher paying jobs unless you are like one of my ex colleagues who had 2 university degrees, spoke 3 languages and worked as a bakery assistant for very little money. Irrespective of what your qualifications are, you must be able to sell yourself if you want to earn a decent salary, which will ultimately enable you to save up for a deposit faster.
Know where to keep your savings >> When I started my journey I had a term deposit bank account that earned me interest. Every month I pumped as much money into it as I could. Later I realised that I could open an online savings account that earned me a bit more interest so I switched to them. These are fine options but you must realise that by investing in the stock market you could end up generating more money in a single day than what these savings accounts give you. Think about the billions of dollars worth of profit that banks make each year after paying many millions to the management and traders. It's insane!
Borrow from someone >> Now we are starting to get more creative, however this is a risky business if you don't know what you are doing. If you loose the money that you borrowed from someone than you could find yourself in a big trouble. Although this is a really good strategy to build wealth, you have to make sure that whatever property you invest into is very carefully selected.
Vendor finance >> This is the ultimate way to invest in property! It's essentially the same as point 7 but that 'someone' happens to be the property owner who is selling their property to you.
Point is is extremely versatile and I could write a book about it but for now, I will just get your subconscious think about it.
The most important matter is that you must find out what motivates the vendor and give it to them if reasonable.
The vendor is a retired person who wants to offload his investment property. If he sells the property then they have to pay a lot of tax on the massive lumpsum that they receive. If they do not have any plans with the big chunk of cash then you could offer them a bit more than the current market value and pay in instalments. That way the vendor will save loads on tax, which means more money in their pocket, while you take control of a property with potentially $0 deposit and let a tenant pay a big chunk of the monthly instalments that you negotiated with the vendor.
Ask the vendor to finance the deposit for you. Obviously it's expected that you would be paying higher interest rate for the deposit part of the purchase price but if it is a good property then you'll be fine.
Write an option contract on a property that you believe can be developed and sort out all the development related matters before you buy it or just simply sell it to someone with the cash. E.g. you see a property that you believe can be subdivided then you could buy the property under an option contract and instead of spending your money on the deposit, you can spend your money on sorting out the subdivision and sell the subdivided properties for a hefty profit.
Do the legwork and negotiate a great deal for someone with cash. In this case you won't end up with the property but you can sell the opportunity to your cashed up friend, who could be working long hours and most likely don't have the time to find deals themselves. They will be more than happy to pay you for the deal that makes them money.
Joint venture is similar to the previous example but the difference is that you create a legal entity for the project and split the ownership with someone who has the cash to fund the deal.
I hope this post helped you to get your entrepreneurial creativity going.