How to Make Money in Property Right Now: Passive vs Active

https://www.youtube.com/watch?v=zBITEtsXKII

Most people trying to get ahead in property right now are actually doing the wrong thing.

Seriously.

Some are sitting there waiting 15 or 20 years hoping prices go up, while others are creating massive equity in a year or two.

Same market. Completely different outcomes.

And if you don’t understand the difference, you can waste years or even go backwards.

So today I want to show you what’s actually happening.

Because right now there are really only two paths in property.

And the people pulling ahead understand exactly how both work and when to use them.

Let me explain.

And quickly, if you’re interested in property development, you can join our free property developer network, the Little Fish Network.

Path 1: Buy and Hold (Passive)

So, the first path is the traditional one. The one most people know.
You buy and hold property, renting it out for the long term.

That’s it.

You’re building a portfolio, collecting rent, and relying on the value of the property increasing over time. What people call capital growth.

This has worked in Australia for decades. It’s simple, it’s predictable, and for a lot of people it’s a really solid way to build wealth.

You buy something in a good area, make sure it’s liveable, get a tenant in there, and just hold on.

Buy and Hold Advantages

Over time, if you’ve bought well, the property usually grows in value. There’ll be ups and downs, but over the long run it tends to trend up.

And the risk is relatively low.

The biggest issue is usually just making sure the place stays rented. Because if there’s no tenant, you’re covering the loan yourself. But if the property is in the right area and people want to live there, that risk is usually manageable.

So it’s simple. It’s steady. It suits people who want a slower, more hands off approach.

Buy and Hold Risks

But here’s the trade off.

It takes time. Like real time.

You’re mostly waiting for the market to grow your wealth. You don’t really control the speed.

And the other thing people don’t always realise is that when you buy a property, you actually start behind.

You’ve got stamp duty, legal fees, buying costs. All of that can easily be six to eight percent on top of the purchase price. So the property needs to grow in value just for you to break even.

Then on top of that, a lot of the time the property actually costs you money to hold at the start.

The rent doesn’t fully cover the loan, so you’re putting money in every month.

That’s negative gearing. In Australia it just means the property costs you money to hold. There are some tax benefits, but you still need the cashflow.

And if you buy the wrong property in the wrong location, the capital growth might never really come.

I saw plenty of people sell after years and barely make anything. Sometimes even lose money just because they bought the wrong property in the wrong area.

So buy and hold works.

But you need patience and you need to buy very well.

Path 2: Property Activation (Active)

Now the second path is completely different.

Instead of waiting for capital growth, you create it.

You buy a property and you add value to it.

That might mean knocking down an old house and building something new. What’s called a knockdown rebuild.

It might mean adding another dwelling on the same block, so instead of one home you now have two. That’s what people call a dual occupancy.

It could mean splitting one block of land into smaller blocks that can be sold off separately. That’s called subdividing your property.

Or you might build multiple townhouses on the site.

But the idea is simple.

You take one property and improve it or multiply it to increase its value.

Property Activation Advantages

The big difference here is control.

With buy and hold, you’re waiting for the market to move. With this approach, you’re forcing the value higher by improving or multiplying the property.

If the project works out and runs well, you can create a big jump in equity when you finish. You’re not starting behind financially. You’re often finishing ahead.

That gives you options.

You can refinance the development loan and access the equity, the extra value the property has gained, and reinvest it, improve your cash flow, or hold a much stronger asset.

And because you’ve improved the property or added more dwellings, the rental income is usually higher too.

Sometimes the income can even cover the costs of the property once the project is done.

You also get more flexibility.

If one property becomes two or three, you can sell one and keep the others, reduce your debt, or hold them all for income. You’ve got more options.

Property Activation Risks

But this path does come with more risk.

There are a lot more moving parts.

You’re dealing with council approvals, design, construction, finance, timelines.

And there are more opportunities for things to go wrong if you don’t know what you’re doing or don’t have the right team around you.

The lending is more complicated.

Build costs are higher.

And if you get it wrong, you can lose money just as quickly as you can make it.

So it’s not passive.

But if you’re wondering is property development profitable, the answer is yes, when it’s done properly, it can accelerate your financial position in a big way.

What Successful Investors Do

And here’s what you’ll notice.

The people who tend to do really well in property don’t just pick one of these paths. They often use both.

They might start by building a portfolio with buy and hold, then use small developments later to speed things up.

Or they buy properties that could be developed in the future, even if they just rent them out for years first.

So the property grows in value over time, but it also gives them the option to add more value later when the timing is right.

And this is exactly how a lot of property investors are getting ahead in property right now.

They understand both approaches and use them at the right time.

How to Choose a Strategy

And at the end of the day, there isn’t a single right path.

It comes down to your personality, how comfortable you are with risk, how much money you’ve got to work with, and how fast you want to move.

Some people want simple and steady.

Others want more control and faster growth.

Both can work.

But the key is understanding the difference.

Because once you do, you can choose your path intentionally instead of just hoping things work out.

And if you’re interested in property development and want to go deeper, there are a couple of ways we can help.

First, you can join our free property developer network, the Little Fish Network. There are thousands of property developers in there sharing knowledge and real projects.

If you want more direct help, I also offer one on one property development mentoring, and my team of leading property development consultants run developments and build projects end to end through our project development management service.

If you’d like to talk through your project, you can book a call with me and we can figure out the best path for you.

Until the next one see you at the top.

Filled under: All Property Investment