As a property coach there is one particular strategy that I teach to all of my clients and it is this – The Four Time (4x) Growth Plan.
The 4x Growth Plan is a strategy I use for every single investment I make, and today I’m going to explain it based on an example of a property I own in which it worked really well.
First things first, we start with deal growth.
Deal growth is very straightforward – you make a deal, and you earn money from that deal.
Now, the property I purchased was a double-story apartment in Dulwich Hill in Sydney. I purchased this property at a time when the market was quite weak – during the Global Financial Crisis – so I only paid $400,000 for it even though it was really worth $500,000.
Now we know the market wasn’t going to stay weak forever, so I’d already made money on this property because its value was set to go up again.
Next came location growth, and location growth comes from the process of gentrification.
Gentrification is all about the replacement of economics in an area, whereby wealthier people with higher incomes move into suburbs that are traditionally habited by a lower socio-economic population and with it bring new money – improving housing and attracting new businesses.
So, all of a sudden Dulwich Hill became hip and began to attract a lot more money into the neighbourhood.
Market growth is also a fairly obvious one – the Sydney market grew and with it so did the value of my property.
Of course, there is not just one property market in Sydney, there are markets within markets. However, across the board we know that the Sydney property market has been one of the strongest and most consistent over the last few decades.
The fourth type of growth relates to behavioural growth.
This growth comes from advancements in the neighbourhood that lead to changing behaviours of the population.
For example, in Dulwich Hill, a light rail line and stop was built right down the end of the street from my property. This behaviour created mobility for people living in Dulwich Hill so that they could utilise public transport more so than relying on cars.
ONCE YOU GET ALL FOUR, THE CYCLE STARTS AGAIN
The first time my property went through all four types of growth it doubled in value in about eight years. However, the best part of the 4X Growth Plan is that if you get it right, it starts again.
How? Well, the process starts again at deal growth.
A lot of new property development came to the neighbourhood, including another apartment block across the road from mine. However now these apartments are valued at close to a million dollars.
Now to build is more expensive than to buy second hand. So how do I take advantage of deal growth? I can’t get a discount again because I already own the property – but I can renovate it to add further value.
HOW DO WE FIND SUBURBS THAT ARE POSITIONED FOR THE 4X GROWTH PLAN?
Many property investors look for deal growth but then forget about the three other growth elements.
It takes a good level of research and a thought-out strategy to achieve 4x Growth. This is something I teach at Positive Real Estate to new and existing investors.
Our free property investment nights are a fantastic way to start learning about these strategies and putting them into action. We have some expert real estate professionals who understand growth and where to look for it.
If you’re ready to gain an edge and establish a strong property plan that will see you excel, join our next free event.
Space are limited.
By Sam Saggers