How To Start From Scratch (Real Estate Investing In 5 Steps)

You might be looking to get into property investing. So, in this video, I want to share with you five key steps so that you can start from scratch. You might have bought property before, you may have never bought property before, but these are the five steps that you need to start from scratch to get to retirement with a real estate portfolio. So, if you're interested in what my thoughts are, then definitely keep watching. Hey, guys. My name is Ravi, and welcome back to Personal Finance with Ravi Sharma. If you're new here, smash that subscribe button because I talk about real estate, cryptocurrency, and financial freedom. Now, in a second here, we're going to go into my whiteboard, and I'm going to walk you through the five key steps that you are required to follow if you want to start from scratch in 2024 to get to financial freedom with real estate. I'm going to make it super simple, but you're going to realize very quickly that right now, it's quite easy to buy real estate, but to buy good real estate is very difficult. If you go into many areas that are supposed to be booming and areas that are going to be primed for growth, everything seems to be under offer. And you just get really frustrated because every time you talk to the agent, they're saying, it's actually already under offer, or we've already got 500 offers on the table, and they're way above asking price. Now, before jumping into finding the right property, we need to figure out a couple of steps before that, which will ensure that you buy the right property at the right time. So let's jump into it. Now, step one is your strategy. So you need to sit there and ask, what is your why? Now, the way that you could break this strategy down is start with a few points. So what passive income are you looking to achieve? At what age do you want to like actually retire, or at least transition from a full-time job to maybe part-time hours? Then you want to look at what does retirement look like based on your age, whether it's something that you can achieve early on, or is it that you don't want to compromise on lifestyle in your early 20s, 30s, and 40s, and you're okay working till 65. But you want to ensure that by the time you get to 60 or 65, that you are fully self-funded. And that is very important because when you go through this journey of trying to work for the next 30, 40 years, only to then have to rely on the government or your super, that may not be enough. It's just not good enough. And that's why we need to start being proactive about this approach. You may be in your 20s and 30s and saying, well, what do I care about retirement? But if you can now retire in the next 15 years and live a life of freedom, means that you're going to be more fulfilled in what you actually do. Because sitting on a beach sounds great. But after a couple of days, you're going to get bored. For others, it might be a couple of weeks. But you really want to focus on your why. And that is the key here, is why is it that you so badly want a real estate portfolio? Now, it could be that you want to have financial freedom for yourself. You may not really like your job. You may want to shift into something else that you're more passionate about, but never had the chance to. You may have kids and you've realized that your upbringing was really difficult. Financial stress was always a thing, just like in my own household. So then you opt in for a different lifestyle for yourself and for your future kids. So really defining what that strategy looks like is going to be the first step in this entire process. Now, you might be looking at this and going, well, I don't know, I have no idea where to start. Then you can book in a discovery call with our team and we'll be able to help you by pointing you in the right direction. Now, whether that's to use our services or whether it's to just get some more clarity around what you're doing and validation around what that next move looks like, I think it's really key that you reach out to the right people. So I'll leave a link in the description below. Now, step two is your acquisition plan. You need to figure out what your how is. So you figured out why you want to do this, but how are you going to execute on this? Now, it might be three properties, it might be 30 properties, but you need to also figure out, is it going to be under a trust? Is it going to be under your personal name? Is it going to be under your SMSF, so your self-managed super fund? These are the sort of things that you need to figure out and structure properly from the beginning. Because if you don't have this structured properly, you can find yourself three to four years later when you've bought your property to go, shit, I wish I had planned this out properly before I purchased something. Because unlike grocery items, which you can go down to Woolies and Coles and pick up for a couple of dollars, you're buying real estate. And that's really, really expensive here in Australia. You could be spending $500,000 to $600,000 just to get an investment property. Now, depending on where you live, if you live in Sydney, you're like, sign me up, 500K sounds like a bargain. But if you're not willing to look interstate and look at different areas primed for growth because of supply and demand ratios, you're not going to get the growth that you want. Now, when it comes down to an acquisition plan, you need to have this quite robust. You can't just simply say, well, okay, I'm just going to buy four properties at 500K and just hope for the best. Because in four years time, there may not be any 500K properties left. And that's the same thing that I told clients three years ago when we were buying property for about 250K, which are now 450 to 500K. And I said back then, look, the glory days of picking up property for under 300K will soon be over. The next tier will be 400K. And that's pretty much what we're seeing at the moment. And then the next tier will be 500K. So you need a robust plan and you need to move at speed. So it's very key that if the plan requires you to purchase four or five properties, you want to stack them up early on so you can hold those properties for as long as possible. We've heard time in the market versus timing the market. If you can do both, you will do exceptionally well. So that's what the acquisition plan will look like. Again, if you need the help, reach out. The next step here, step three is finance. Now we can have the greatest plans in our mind saying, Ravi, I want to buy 12 properties. I love the idea. I can retire early. Great. But we can't do this by ourselves. We need the bank. And I've said this before, the banks are your friend in this whole situation. I know that we're always against them and the media likes to shit on them. But at the end of the day, most people can't afford to buy property without the bank. So you need to know what your borrowing capacity actually is and how much of a deposit you have currently versus what you actually need. Now, some of you may be in a fortunate position where you have your principal place of residence and you've just held it for a couple of years and it's grown in value. So you might actually have the equity already there, which could substitute as a deposit. Some people don't actually know this, that you don't need cash as your deposit. You can use equity in a property, whether it's an investment property or your own principal place of residence to get started. And it could go a step further. Let's say, for example, you're in your twenties and you're saying, there's no way I'm going to have enough of a deposit to purchase property. But your parents have had the same property for the last 10, 15 years. So they might have 600, 700K worth of equity in there. There is a way to be able to access that. Now I'm going to link a video up here about guarantor loans. You need to check it out because once you understand that, I think it's the biggest loophole around you getting started, especially early on. If you don't have the cash deposits ready to go, but you have really good income and good savings habits and you want to execute on something like this, guarantor loans could be the way that you go. But again, watch that video so you get a bit more insight. Now with your borrowing capacity, that's going to then dictate what you can be approved for. And this is so vital that you understand this before you go out there and start looking at property. Because if you say, oh, well, I want to buy a 600K property, but my borrowing capacity only allows me 300K, then you'll be priced out of that particular market. I often hear people say, well, look, I want to buy a house with these specifications in this market. Go and find it for me. I'm like, cool, man. I'm a buyer's agent, but not a magician. And in some markets, you need to be aware that with those budgets, we're going to be constrained by what we can actually purchase. Now step four is execution, which I call is let's buy. This is probably the most nerve wracking, stressful time that you're ever going to experience when it comes to buying property. That's why you need to really follow and commit to step one to step three. Because if you have your strategy, you know what your acquisition plan is, and you know what the bank is willing to give you, you're going to have very good scope of focus around what you need to target and how you target it. Now, when it comes to execution, there's a couple of things you need to keep in mind. You need to keep in mind research. Are you researching? Where are you researching? And what are you using to research? The speed at which you can operate. Now, of course, if you're working a full-time job, you're pretty much going to work. You come back from work. You've got a couple of hours there. Are you looking at property? Are you calling up agents while you're at work? Is your boss going to like it? Probably not. These are the sort of things you need to consider is that if it takes you one week longer than anyone else, that means they're getting a better deal than you are. That's plain fact. The next thing is budget. And that's going to be dictated by what your finance looks like. It also dictates what you can actually hold in terms of your entire real estate portfolio, given most properties now are going to be negative cashflow. The next thing is process. Have you done this before? And if you have, what can you do to streamline the process? We have limited time in terms of what we can go out there and spend towards buying property or talking to conveyancing, talking to brokers, talking to agents, because we all love that. You need to be super efficient with how you do this. And that's going to tee up with the confidence that you have. If you've gone out there and bought 10 properties, chances are your level of confidence is much higher for your 11th property than it was for your first property. And if you're someone who's never bought property, your confidence is going to be at an all-time low because you've never done this before. So you've got the choice of doing it yourself or going out and outsourcing it. Now let's just take an example here, right? If you were to go and do it yourself, let's say you go and do courses or you go and read books and you look online to see every metric that you can to go and execute. Now you can go and do it, but how many properties could you actually inquire on every single day? You're probably looking at maybe 10. And if you did that five days a week, you're at 50 for the week. If you go ahead and you use a buyer's agent, depending on the size of their company, I can only talk about our numbers. Now at SP, we can pretty much go through 180 per day. And that's because nine people do it full-time and they look at 20 deals every single day. And I'm not just saying they look at 20 properties and that's it. They do due diligence on 20 properties every single day. So if they're looking at those properties and they've got the assistance to help them as well, they're able to go into the right markets at the right time. They're going and building out those relationships with agents and we're doing it at speed. So when I look at these properties, I'm going at scale, I can look at 18 times the volume than if I was to do it myself. And I'm the perfect example because for like seven years, I bought property by myself. I was in this option. I was looking at 10 properties a day and that's if I was lucky. Some days I'd miss out. So on average, I might only look at 20 for the week. And I only looked in areas that I knew about. If it was areas that I hadn't heard about, I didn't have the time to research because I needed to get into the market as soon as possible. Now for the last four years, every property I've bought is bought through Search Property. I want the buyer's agents, the sourcing managers, the client account managers, give me the full experience. One, because I'm selfish because that is going to save me time. But two, and most importantly, it's speed. I'm not going to be able to chat to agents the way that they can. And that's why I rely on them with their experience. And to be honest, it's such a peaceful experience for me because I get to focus on what I need to do and what pushes the needle in the right direction. Meanwhile, the investing is more passive. So it really comes down to two things. It's speed and action. And when you look at speed and action, you're probably going to have to offset that with a cost. A cost, whether you think is a cost or an investment. And in this case, if you're paying for a buyer's agent or you're paying for courses or you're paying for books, there is a cost associated with the knowledge. But knowledge is worthless if you have no action. There'll be so many people out there that watch these videos and go, okay, cool, I've done something today. But in reality, you've picked up the knowledge but there's no action associated with it. So if you're not actually actioning it, then the knowledge is useless and you're back to square one. And now step five is just starting. You have to get your pre-approval in place. You need to know you've got your deposit. You've done your research and now it just comes down to executing and buying the right property. Now, as you go through this process, you're going to learn things. You're going to understand that there's certain things that actually move the needle in the right direction. There's certain factors that will push capital growth a lot more. As well as rental growth. And then what you can do is you review it and repeat the process. We've got many clients that come to us and say, look, I want to buy five properties. So they go and use us for the next five properties. The reality is you're not going to be able to retire of a real estate portfolio of one property. So you're going to have to review this process and repeat it time and time again. So just think about how much time it would take for you to do it and do it with confidence. Now, the question I get asked sometimes is, Ravi, is it still possible to get a $2 million portfolio? And that would be, say, four properties at 500K each. In today, 2024, it is still possible. And yes, I see some of the comments going, this is a load of crap. You can't find these sort of properties. And to me, that gets me really excited because that just tells you there are so many people that focus on only stuff they know, the areas that they live around. And unfortunately, looking at the media or looking at headlines saying, these are the best areas to buy, the times have already gone for those areas. You want to be ahead of that curve. And that's why you need the right team around you to be able to execute. Now, whether you use us or whether you use someone else, I think the fact is that you need to move at speed. And if you're just sitting there on your hands, you need to think about how much every day is costing you. We talk about how much money you could save by not drinking coffee. But have you thought about how much money you're wasting by just waiting every single day and delaying that process? That's something to think about after this video. I hope you guys have enjoyed this one. And if you have, smash that like button, subscribe if you haven't already. And I'll catch you guys in the next one. Thanks, guys.