The key to the success of real estate investment lies in the use of the OPM: "the money of others". This is one of the many lessons shared by Michael Beresford, director of investment and investment expert OpenCorp, who also explains how to dramatically reduce your construction costs by tens of thousands – and highlights a "fundamental change" in savvy investors can take advantage
When the OpenCorp team was prepared to organize a series of training sessions in Brisbane, Sydney and Melbourne, its goal was simple: dispelling myths, sharing ideas, and making Investment in property as simple and accessible as possible. for ordinary Australians.
We attended several of these events to see what secrets the team could reveal.
For Beresford, 20 years of investment experience has been reduced to just one hour, giving rise to "a fairly fast educational experience".
"The problem with real estate investments is that people want an immediate return – at 4pm this afternoon if possible, or sooner. But that's not how compound growth works, or how successful you are as a real estate investor. It takes time, "says Beresford.
His own investor journey began in 2003, when he bought a house in Perth for $ 267,000 with a small cash deposit.
"I paired this small deposit with OPM: other people's money. And how did I identify Perth? Using what we now call the MAP process: market, area, property. "
The MAP Process is a simple strategy that the OpenCorp team uses to evaluate the value proposition of a potential asset:
Market: Supply and demand induce market cycles. Capitals have the largest number of people and the smallest number of lands. This is where the company focuses, while avoiding regional areas and mining towns. It is also essential to examine the micro and macro factors that affect the market.
Sector: What types of dwellings characterize the area? "Flats are riskier: they have low land values ​​and can quickly become over-stocked, increasing the risk of vacancy and giving investors negligible leverage to raise rent," says Beresford. The suburbs characterized by individual houses are therefore more sought after.
Property: "We want optimal size and quality, which is why many portfolios do not perform because they have not been optimized," he says. "It does not mean small and affluent and build the property to the maximum; it means maximizing land use and taking advantage of the best areas without over-capitalizing. "
It is this last point which, according to Beresford, constitutes a major asset of the OpenCorp team. After honing their strategy after years of buying and building hundreds of millions of dollars worth of property on behalf of their clients, they have come up with a winning formula that generates instant profits.
"Say you're spending $ 300,000 on a block of land and you decide to build a 240-square-meter three-bedroom house that costs $ 300,000. Your total expense is $ 600,000, "he says.
"At OpenCorp, we could create a floor plan of 215 square meters and four bedrooms – and we can do it without reducing the quality of life of the property. We will strategically move walls and spaces to reduce construction costs to $ 260,000 instead of $ 300,000. "
"A fundamental change is happening in Australia … as investors, if we can exploit and understand them, we can draw party to get the best result possible. everyone "
The end result is a new house that has almost identical living space and is of the same type of property, with no change for the tenants' appeal but a saving of $ 40,000. The property also has an extra room compared to similar homes in the area, making it much more efficient in terms of cash flow.
This is just one of the proven strategies that Beresford and the OpenCorp team rely on to help their clients build their real estate portfolios. Another key pillar of their services is to recommend solid, growth-ready sites in which to invest.
Long before the rise of Sydney and Melbourne in recent years, OpenCorp encouraged its customers to seek low-risk, high-growth opportunities in key locations in these cities, and the team has now defined its next point hot.
"Where do we buy next? Brisbane, "confirms Beresford.
After a decade of stagnation, he thinks that some areas of the city are poised to grow, a sentiment shared by researchers at BIS Oxford Economics, which recently announced that Brisbane homes would post 20% growth in over the next three years.
While OpenCorp favors a strategy focused on new construction, Beresford adds that no matter where you buy or the type of investment you invest in, the important thing is to have A plan – and to implement it.
"A fundamental change is happening in Australia: it's not new, but the government is not talking about it. As investors, we can take advantage of it to get the best possible outcome for everyone, if we can exploit and understand it. "
This change, he says, concerns older Australians – and the fact that we are living longer, with more years of retirement than ever before: –
"I have a fundamental problem in living in a country where people work hard all their lives and the best advice for them when they reach the retirement age is to part ways, because you enjoy an older pension as a single says Beresford.
"That's the big problem of pensions. The number of Australians aged 65 and over is expected to increase dramatically to more than four million by 2021. Life has changed, and we need to do something different to protect our financial situation in retirement because there is no such thing as of passive income created by the property. your own house squarely. You must use the equity in your home to create a retirement income. "
Real estate investing is a sure and proven way to create wealth, he adds. With the right strategies, it is possible to make huge financial progress, such as repaying your home loan in 10 years rather than 30 years. Beresford also insists that investing is a matter of mentality.
"In reality, the road to financial security is really boring and boring – but it is also super efficient"
"Adopting the right state of mind is the first essential step to becoming a successful investor. It's crucial to have a good margin of safety before you create your strategy and start moving forward. Only a small percentage of Australians invest, because we do not all grow up with parents who tell us: "The pension will not be enough; take a positive attitude towards debt and start planning and thinking about your financial future now, "he says.
"In reality, the path to financial security is really boring and boring, but it is also very effective. It's like getting up, going to work in the morning and doing the same thing every day in a loop. Increasing your wealth as a real estate investor is exactly the same; you just have to follow a proven process and be consistent, and you will get the results. "
All the information presented in this article is general and may not apply to your personal situation.
For a bespoke investment strategy tailored to your budget and goals, contact OpenCorp today! Ph.1300 649 564
