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Welcome to Part 3 of our Grow Your Portfolio Series with Wealthi
Missed out on Parts 1 & 2? Click the links below to catch up.
Part One: How to Use Demographic Data to Research the Property Market
Part Two: How Do Infrastructure Developments Determine the Success of Your Property Investment?
It should come as no shock to you that buying an investment property is nothing like buying your dream home. Investing in property based on whether or not you like the colour of the kitchen cabinets or the style of the bathroom is a surefire way to damage your wealth.
Instead, you need to decide on a property based on the suburb’s rental yield, the projected growth, if it has what tenants want, and so on. This is what it means to treat your property like a business
Keeping your emotions in check is essential, and learning how is a great way to become a better investor.
To bring an end to this four-part article series, we sat down with Domenic Nesci (Co-Founder of Wealthi) to chat about the one mistake he wishes every investor wouldn’t make, and we also dive into his personal property investing experience.
You’ll learn about the risks he took to grow his now million dollar portfolio, and he shares his tips and tricks to help you follow in the same path.
The most common mistake: Not stepping outside your comfort zone
Savvy investors who are looking to build their property wealth buy in areas that provide the most opportunities for growth, backed by professional data. By now, this is something you’ll agree with.
So do most, if not all property investors. But still, many get it wrong when they actually buy.
Domenic shared with us that the most common mistake he saw was that investors chose to buy in their own neighbourhood, simply because it was familiar and comfortable.
And we get it, it’s not easy to abandon all emotion. After all, you know your local area and its demographics.
“You’re naturally going to gravitate towards things that you know and are familiar with. When you’re spending $500k it’s very difficult to not have any level of emotion. Of course there’s going to be a level of attachment to the investment property.”
Another story Domenic says he hears is investors buying a property because they wanted to use it as a vacation home 2 months a year.
As you can tell, keeping your emotions out of the investment process isn’t as easy as “not falling in love with the property.” But it’s about saying no to those ideas we get about why it’s a good investment when it’s not founded in growth potential or real market data.
Investing in property needs to be uncomfortable, and a bit scary. To maximise your gains, you need to step out of your comfort zone and look beyond what is familiar, towards broader regions.
An investing trick to keep in mind: The Ripple Effect
Where you should look if you want to invest nearby
- As locations thrive, the populations will start to spill over into the neighbouring suburbs, and these locations will thrive and grow. This is called the ripple effect
- It’s a safe and cautious way to invest but not necessarily the best strategy to grow your property wealth
Say you’ve found an amazing suburb with strong projected growth and a healthy rental yield. Only problem is, you just can’t get your hands on a property there!
When faced with this problem, many property investors get discouraged or give up. That’s when the ripple effect comes in, and you can use it cautiously as an ally.
So, what is the ripple effect in real estate?
As locations thrive, the population in that location will start to spill over into the neighbouring suburbs, and these locations will also start to thrive and grow.
“People tend to just ripple outside to the next suburb, and then prices gradually go up. They bind the neighbourhood next door to where they were brought up, which makes it prosper too.”
So if prices are simply too high in the suburb you’ve bookmarked, looking in the area around it is a sound investing strategy. It’ll serve you well, but only if you use it cautiously.
Don’t forget your fundamentals: Read the market data before you decide. Put yourself in the shoes of your future home buyers. If you wanted to live in that neighbourhood but you couldn’t, what’s the next, closest place you would go?
Domenic Nesci on how he built his million dollar portfolio
At just 23 years old, Dom started investing in property, despite all of his family and friends telling him not to. He started small: a one bed, one bath (no parking) apartment in Newcastle.
“It was a terrible thing to do on paper, but in hindsight it was a risk that paid off.”
But Domenic wasn’t just shooting in the dark.
At the time, Dom had looked at the surrounding infrastructure and noticed there was a brand new university being built and the old rail line was being replaced with a light rail. These insights solidified his decision to invest.
It was also near the beach and had an outdoor space, two big pluses he knew Newcastle tenants would be looking for.
“The way I saw it, the positives outweighed the negatives so I put a deposit down.”
After just 18 months, Domenic revalued the property he bought for $295,000 and got a new price at $410,000.
With the money he had made from that investment he was able to leverage his new capital to start building a property portfolio. He used the cash to build a 2 bed, 2 bath, 2 car space house in the same market. Then he used that equity again to buy another investment property.
As you can see, when you do the research, it pays off. And what’s great about property is that once you’ve made one investment, making the next one gets a lot easier since you can leverage your equity.
“There’s no perfect investment, all you can do is the best that you can. Do your research, pay attention to the market and buy the best thing that you can at that point in time.”
Today, Domenic is the Co-Founder of Wealthi, a startup in the real estate investing space. Wealthi’s goal is to help make a successful investment journey easier for owners like you.
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We have partnered with our friends over at Wealthi who are experts when it comes to property investing. Co-founder Domenic Nesci who comes from an impressive background in financial planning and real estate development, has been more than happy to share his personal experiences on how he started to build his now very impressive property portfolio, and the risks he took to get here.
Over 4 parts, we share valuable and useful advice in partnership with Wealthi, to help you make the best decision on where to make your next property investment purchase. If there’s anything you take away from this, it would be to make sure you do your own research, and dive into the data head first.