Checking Out Your Property Investment Strategy for Success

For all the methods of creating wealth from an investment property there’s equally as many ways to lose it. The real challenge is in identifying and understanding key aspects of the property cycle and formulating an investment strategy before you begin looking. This can be done with a little help from online sources, property managers and fellow investors; however at the end of the day you need a strategy that’s tailored to your budget and goals. Thinking about dipping your toes in the property investment pond? Read on to find out more about the strategies you can employ to improve your chances of success.

Planning An Investment Strategy

Planning your investment strategy is just as important as the foundations your properties sit on. But before you rush into the planning where and how, you need to make sure that you know exactly what you want to get our of the experience. This can be done by looking into whether you’d like to purchase for capital growth purposes (long-term return) or for an ongoing rental income (short-term return).

Strategy 1: Long-Term Capital Growth

An investment strategy that centres on buying for capital growth is when you look to purchase with the hope that the property in question will increase in value over time. Here your priority is on buying low and selling high to maximise the return.

An extensive amount of research pre-purchase is required if you intend to buy for capital growth. You need to identify a suitable market – preferable one that’s already on the rise with all indicators pointing to further increases in the future.

If you do find the right home in an ideal suburb, you can then simply sit back and reap the benefit of your long-term capital growth strategy. Just remember that if you miss out on selling at the peak of the market, you may end up waiting years for the next spike in prices. Keep a finger on the pulse by talking to trusted local agents, and a keen eye on property values in the area.

Strategy 2: Short-Term Cash Flow

Another investment strategy that’s popular within Australia is to find a rental property that returns more than the amount you’re expected to fork out in mortgage repayments, ongoing costs, management fees etc. This method for investment makes cash flow king, and is generally favoured by those new to the property market with a low annual salary or wage. One of the benefits of this strategy is that the extra cash coming in can help you offset any shortfalls and provide you with access to disposable income to contribute towards other investments. But before you leap in feet first, it’s important to understand that generally speaking, high yield investment properties are located in regional towns or areas at the bottom of the socio-economic spectrum – meaning lower capital growth.

You Don’t Always Have To Follow The Herd

If you’re considering investing in property you’ll soon realise just how easy it is to get caught up watching and copying what every other investor is doing. This can lead to problems when purchasing and issues even further down the track. Your best bet is to always make sure that you plan, plan and plan some more so you can work out an investment strategy that suits your life goals or budget.


Resources:

  1. Yasmin Noone, “The Key To Building A Multi Property Investment Portfolio”, https://www.domain.com.au/advice/the-key-to-building-a-multi-property-investment-portfolio/
  2. Nila Sweeney, 16th December 2016, “Beginners Guide To Property Investment”, http://www.realestate.com.au/advice/beginners-guide-to-property-investment-strategies/
  3. Aussie Home Loans, “Property Investment Guide: Investment Returns”, https://www.aussie.com.au/home-loans/property-investment-guide/investment-return.html
  4. Nila Sweeney, “5 Keys To Successful Property Investing”, http://www.yourinvestmentpropertymag.com.au/blog/nila-sweeney/5-keys-to-successful-property-investing-176460.aspx

 

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