Hey, Andrew here
again, we've got day five of the 21 day property investors course.
Now what we're going to talk about is house hacking and multi income investing.
Now because we know how important yields are, what we're looking for is ways
that we can increase our weekly net income.
And the thing that you want to remember
is that cash flow is going to liberate you.
Now what does that mean?
It means if you've got a really healthy weekly positive cash flow,
you know, the net income coming into your bank account each week,
on top of all the money that goes out,
this is going to give you a lot of freedom, freedom to choose
how you spend your time and freedom to invest in more things.
So capital gains is the thing that's probably going to make you wealthy.
But cash flow week to week, month, the month, the year is going to give you
the lifestyle options that you're probably looking for.
So how do we create more cash flow?
We look at ways that we can house hack
and house hacking is it's a mindset.
It's renting out the bedrooms of your four bedroom home room by room
because it makes you an extra 50 to 100 bucks a week.
Now, that is more work.
And the frame of mind that we're using at the moment is,
let's say you own a four bedroom house, you're renting out the three best bedrooms
at 200 bucks a week, and you're using the smallest
or the worst bedroom for yourself and you're essentially probably
living for free or for very minimal outgoing costs.
So if you have a four bedroom house that rents out at say $650 a week
or you rent out the three best bedrooms for $200 a week each
and you have the last bedroom, then you're essentially paying
only $50 a week rent to have that bedroom.
And who knows, maybe even that 600 bucks you're getting from everyone
else is actually more than covering the mortgage expense.
So what we're trying to do is get yourself in the early stage
to living for free or living without a housing cost.
Now when you're getting started, this is really great.
But if you're already established you already got a couple of properties or
renting out properties by the room is not
not an exciting prospect.
Then maybe what you want to consider is minor dwellings
now each city and each council
region is going to have their own different rules, and they do change.
You want to understand what your options are for minor dwellings or what
the options are with the investment properties you're looking at buying are.
Because depending on the size of the available land, depending on connections
depending on any restrictions or closeness to certain things,
you might be able to fit some other dwellings on the site.
Might only be a one or two bedroom
property or y'know
bedroom, but it's going to be giving you an option
of taking like a low yield property to something much higher.
And again,
it's going to give you way more cash flow if you're adding other dwellings
to this property and you'll often drive through areas
where there are very obviously investment properties and there'll be
a lot of these small shed-like looking
dwellings in the backyard.
And so what you got is units and then like a little minor dwelling on the back.
And that's how that investor is getting
maximum rates return on that investment option.
And the thing you got to remember is you might only rent it out
for $80, $120 a week but it's very regular and people don't have to live there.
You know, the market is deciding you're
offering something to the market as a rental option.
And if somebody is willing to take that on,
then you might feel like you're not providing something
that is good enough for yourself, but you're providing a cheap option.
For somebody that's at their stage of life that that's all they want or can afford
at that time.
So always remember that yield matters.
Yield is going to help you borrow more.
It's going to help you
not be as exposed or stressed out by your debt burdens.
Now, when you're looking at investment
properties, you want to have an eye for detail.
You want to figure out if there's land enough on these properties
to fit a house with with wheels, a tiny home or relocatable home.
Are you going to be able to increase the yield of this property
in a way that maybe other people are not noticing that you're willing
to pay more than anyone else, because, you know,
you can immediately increase the yield and get a better return.
Now, minor dwellings is one thing and that
they're not the same as a home and income.
A home and income is is basically
two or three properties on the same bit of land.
Now, home and incomes can be made up, typically a four bedroom
and a two bedroom, three and a one, two and a two.
There's lots of different combinations.
And home and income is actually really good
for first time buyers as well as investors.
The reason it's great for first time buyers is if you have, for example,
got a $700K budget as a first home buyer,
if you buy a home and income that's going to get rental income, that might
push your $700K borrowing option up to 1 million, 1 million for example,
because it's going to be supported by rental income.
And especially if you buy, say you buy a four and a two,
four main house, two small house bedroom on that home and income.
And you live in this two bedroom then you as a first home buyer
you're renting out a four bedroom home probably at a surplus to support you
on the income for that whole property - on the cost, sorry.
And then when you move out,
your first investment property is already sorted for you.
You've actually got two.
So when you're buying your second investment property or your second
property, you're essentially buying your third dwelling as a owner occupied.
And these home and incomes, when you buy
well can be a really awesome springboard for new investors.
Generally speaking, you're going to see these home
and incomes advertised based on the yields And that's why
and future development options, you really want to have an extra four
experts kind of mentality
and that eye for detail, understanding the development and subdivision potential,
understanding how to get more yield from that existing property.
And you might get to increase rent or increase charges to individual tenants
by offering appliances, furniture, storage.
There's all sorts of things that you can do to take what you might be charging.
$180 a week, up to $210 a week,
and that over a year and across multiple tenancies
is going to make a very big difference, not only to the cash flow side of things,
which makes life a lot better, but also for borrowing power,
which allows you to keep repeating the process.
So house hacking is definitely something that you're going to want to learn more
about buying a single dwelling on a single bit of land is
not creative
and it's not going to be the way that you're going to
get those ten properties.
You really got to understand how to increase a yield
and how to squeeze more tenants into properties within reason.
So any questions about house hacking, let us know and we'll get onto day six.