Building Wealth through property Investing

I attended this year National Achiever Congress at The Mines International Convention Centre on 23 ~ 25 May.

Below is my note on one of the property investment main points for my record.

Speaker: Caroline Claydon

Title:Building Wealth through property Investing

Notes taken as below:

Her 7 Steps Systm

Step 1: Education & Strategy (Professional use CPD=Continuous Professional Development) safe and secure way

Passive Income = Cash Flow

It is very important on this concept. For property investment, a lot of people focus on capital rather than the positive cash flow.

Look at the Cash funnel diagram below.

You start to raise cash by your earn income, or you raise it from your family members or friends, or you are able to generate or create the cash by any other means.

The cash generated you invest in the passive income vehicle such as Real Estate. Real estate can rent out with positive cash flow and you will be able to be financially free.

This is illustrate in Orange Arrow. For the  Blue arrow, you can use your cash to buy the Equity too. Buy below market value property and sell it at market price to earn the profit. However, this will only building up your wealth but you cannot have financial freedom.

A good example is, when you go to dine in a restaurant, after the meal and want to pay your bills, can you ask the waiter to charge your bill to your house equity? Obviously cannot, you need to use cash or credit card to settle your dinner bills. With this illustration, it has shown that the Cash Flow is more important than the capital growth.

From the triangle below, it clearly exhibit that the Passive income is the base of the wealth funnel. All has to build from the passive income then only to build the wealth through capital growth.

If you build your property portfolio as such, very likely that you are on the right track to be financially free soon and will not be impacted much if there is bad time.

Step 2: Market research& finding deals

Need to access why this is a good time to buy now. The key is index fro high price to accelerated ratio. I am not sure if I wrote this correctly as I cannot understand it myself now.

Low index = 3-5

Medium=5-7

High = > 7

Her strategy of investing is using S.A.P

Define the STRATEGY.

Lock down the AREA

Find the PROPERTY

Step 3: Raising money

Following are the few ways

• OPM
• Creative
• Seller refinancing
• Mortgages
• Forming company

Step 4: Analysis and Deal structure

• Cash flow
• ROI
• Cash Profit
• Yield
• Money back out

Example 1:

Name:Danny & Steph

Strategy: Passive Income & creative financing

Property: Government Low value rental and flip later, it is social housing

Goals : Finance freedom in 2 years

Achieve Goals: 14 months

Market Price = $70K at Rumcorn, Cheshire

Buy at = $51K

Discount = 27%

Rent for 3 years = $700 per month (Yield 16%)

Expense + Mortage = $305 per momth

Nett income = $395 per month

Equity = $19K

Example 2:

Strategy: Passive Income & no money left in

Property: HMO (house of multiple occupation) with 4 Bed rooms and 3 receptions. Convert to 7 rooms

Market Price = $140K

Buy at = $90K

Discount = 35%

Rent 7 rooms = $242400 per month (Yield 30%)

Expense + Mortage = $1137 per momth

Nett income = $1287 per month

Equity = $50K

Step 5: Strategy alignment and creativity

This is advance level strategy by recycle your money and creating income. We called it refinancing lor.

For example Michelle Lee

Buy at $115K

Refurbish cost = $114.5K

Bank value at $350K

Refinance it 6-12 months later.

Gross Yeld = 36.6K/229.5k x 100% = 15.9%

350K value at 65% mortgage = $227500

ROI=15240/2000 x 100 = 762%

Property mentor’s Tips

1. Buy BMV or Add value to property
2. know the banks end value
3. establish the Band end Loan To value
4. Recycle your money on every deal, target to get back your money in 2 years
5. When oppoturnity knock – Take action
6. Do not hesitate

Step 6: Power of Team and Tax Structures

You need to have a team to help you to achieve this