How to Start From Scratch (Real Estate Investing in 5 Steps)

You might be looking to get into property investing.

In this article, I want to share with you five key steps that will help you start from scratch. Whether you’ve bought property before or are completely new to the game, these five steps will guide you towards building a real estate portfolio that can see you through to retirement.

If you’re interested in my thoughts, then definitely keep reading.

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Starting From Scratch

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I want to show you my whiteboard and walk you through the five key steps you need to follow if you want to start from scratch in 2024 and achieve financial freedom through real estate.

I’m going to make it super simple, but you’ll quickly realise that while it’s easy to buy real estate, buying good real estate is much more challenging. In many areas that are supposed to be booming, everything seems to be under offer, and it can be really frustrating when agents tell you:

“Well, it’s actually already under offer,” or “We’ve already got 500 offers on the table, and they’re way above the asking price.”

Before jumping into finding the right property, we need to figure out a few steps that will ensure you buy the right property at the right time. So let’s get into it.

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Steps to Buy the Right Property

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Step 1: Strategy

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You need to sit down and ask yourself: What is your why?

To break down your strategy, start with a few key questions:

• What passive income are you looking to achieve?
• At what age do you want to retire or at least transition from a full-time job to part-time hours?
• What does retirement look like for you? Are you aiming to achieve it early, or are you okay with working until 65, ensuring you’re fully self-funded by then?

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These questions are crucial because if you spend the next 40 years working only to rely on the government or your super, it’s just not good enough. That’s why we need to start being proactive.

If you’re in your 20s or 30s, you might think, “Why should I care about retirement?” But consider this: If you can retire in the next 15 years and live a life of freedom, you’ll be more fulfilled in what you actually do. Sitting on a beach sounds great, but after a few days, you’ll get bored.

The key here is focusing on your why. Why do you want a real estate portfolio so badly? It could be:

• You want financial freedom for yourself.
• You may not enjoy your current job and want to transition into something you’re passionate about but never had the chance to pursue.
• You might have kids and want to provide them with a different lifestyle, avoiding the financial stress you experienced growing up.

Defining your strategy starts with defining your why.

If you’re unsure where to start, you can book a free discovery call with our team. Whether you decide to use our services or simply need clarity and validation on your next move, it’s key to reach out to the right people.

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Step 2: Your Acquisition Plan 

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Next, you need to figure out your “how.” You’ve determined why you want to do this, but now, how are you going to execute it?

It might be acquiring three properties or even 30 properties. But you also need to figure out:

• Will it be under a trust?
• Will it be under your personal name?
• Will it be under your SMSF (Self-Managed Super Fund)?

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These are the kinds of things you need to structure properly from the beginning. If you don’t have this structured correctly, you might find yourself 3 to 4 years down the road regretting your initial purchases.

Real estate isn’t like groceries that you can pick up for a few dollars. You could be spending $500,000 to $600,000 just to get an investment property. Depending on where you live, if you’re in Sydney, for example, $500,000 might sound like a bargain.

If you’re not willing to look interstate and consider different areas prime for growth due to supply and demand ratios, you won’t get the growth you want.

When it comes to an acquisition plan, it needs to be robust. You can’t just say, “I’m going to buy four properties at $500,000 each and hope for the best,” because in four years, there might not be any $500,000 properties left.

This is the same thing I told clients three years ago when we were buying properties for about $250,000, which are now worth $450,000 to $500,000. I said back then: “The glory days of picking up property for under $400,000 will soon be over. The next tier will be $400,000,” and this is exactly what we’re seeing now.

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Now, the next tier will be $500,000 

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Therefore:

If your plan requires you to purchase four or five properties, you’ll want to stack them up early on so you can hold them as long as possible.

You’ve probably heard the saying: “Time in the market is better than timing the market.” If you can do both, you’ll do exceptionally well. This is what the acquisition plan is all about.

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Step 3: Finance

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We can have the greatest plans in our minds, like 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.

I've said this before: the banks are your friends in this whole situation. I know we're often against them, and the media likes to criticise 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
• How much of a deposit you currently have versus what you actually need

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Some of you may be in a fortunate position where you have your principal place of residence, and you've held it for a couple of years, allowing it to grow in value. You might already have the equity there, which could substitute as a deposit.

Some people don’t realise that you don’t need cash as your deposit. To get started, you can use equity in a property, whether it’s an investment property or your own principal place of residence.

It could also go a step further. For example, if you're in your 20s and you're thinking, "There's no way I'm going to have enough of a deposit to purchase property," consider this: your parents might have had the same property for the last 15 years, and it might have $600,000 to $700,000 worth of equity in it. There is a way to access that.

If you don’t have the cash deposits ready to go, but you have a good income, good savings habits, and you want to execute on something like this, guarantor loans could be the way to go.

Going back to your borrowing capacity, that’s going to dictate what you can be approved for. This is so vital to understand before you go out there and start looking at property.

Why? Because if you say, "Oh, well, I want to buy a $600,000 property," but your borrowing capacity only allows you $300,000, 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, not a magician."

In some markets, you need to be aware that with those budgets, we’re going to be constrained by what we can actually purchase.

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Step 4: Execution

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This is probably the most nerve-wracking, stressful time that you're ever going to experience when it comes to buying property.

This is why you need to really follow and commit to Steps One through Three.

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 a very good scope of focus around:

• What you need to target
• How you target it

When it comes to execution, there are a couple of things you need to keep in mind:

1. Research:some text
   • Are you researching?
   • Where are you researching?
   • What are you using to research?

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2. Speed at Which You Operate:
   If you’re working a full-time job, you need to consider:some text
   • Going to work
   • Coming 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)

If it takes you one week longer than anyone else, that means they're getting a better deal than you are. That's a plain fact.

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3. Budget:
   This is going to be dictated by:some text
   • 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 cash flow

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4. Process:

Have you done this before?

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, buying property, talking to conveyancers, 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 tie up with the confidence 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.

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.

Therefore, you’ve got the choice of doing it yourself or going out and outsourcing it.

Let’s take this as an example:

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.

However, ask yourself: How many properties could you actually inquire on every single day?

You’re probably looking at maybe 10. If you did that five days a week, you’re at 50 for the week.

Now, if you go ahead and use a buyer's agent, depending on the size of their company (I can only talk about our numbers), at Search Property, we can pretty much go through 180 per day.

This is because nine people do it full-time, and they look at 20 deals every single day.

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
• Build out those relationships with agents
• Do it at speed

Because of that, when I look at these properties, I’m going: at scale, I can look at 18 times the volume than if I were to do it myself.

I’m the perfect example because for like 7 years, I bought property by myself.

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 there were areas that I hadn’t heard of, I didn’t have the time to research because I needed to get into the market as soon as possible.

Now, for the last 4 years, every property I’ve bought has been through Search Property.

I want the buyer agents, sourcing managers, and client account managers to give me the full experience because:

• I’m selfish, and I know this is going to save me time
• The speed—I’m not going to be able to chat to agents the way they can

This is 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
• What pushes the needle in the right direction

Meanwhile, the investing is more passive, so it really comes down to two things:

• The Speed
• The Action

When you look at speed and action, you’re probably going to have to offset that with a cost—a cost, whether you think it’s a cost or an investment.

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.

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However:

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There’ll be so many people out there who read blogs like this and go, “Yeah, okay, cool. I’ve done something today.”

But in reality, you’ve picked up the knowledge, but there’s no action associated with it.

If you’re not actually actioning it, then the knowledge is useless and you’re back to square one.

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Step 5: Start

Say you’ve done all the following phases.

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Now, it just comes down to executing and buying the right property.

As you go through this process, you are going to:

• Learn things
• Understand that there are certain things that actually move the needle in the right direction
• Know that certain factors will push capital growth a lot more, as well as rental growth

What you can do is 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 off a real estate portfolio of one property.

So, you’re going to have to review this process and repeat it time and time again.

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?”

That would be, say, four properties at $500,000 each.

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To answer that question: Yes, it is possible.

I see some of the comments on my YouTube channel saying, “This is a load of crap. You can’t find these sorts of properties.”

To me, that gets me really excited because that just tells you that there are so many people who focus on only what they know—the areas that they live around.

Unfortunately, looking at the media or looking at headlines saying, “These are the best areas to buy,” honestly, 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.

Whether you use us or someone else, the fact is that you need to move with speed.

If you’re just sitting there on your hands, think about how much every day is costing you.

We often 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 the process?

That’s something to think about after reading this article.

I hope you guys have enjoyed this one.

I’ll catch you in the next one.

Thanks, guys!

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