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As all seasoned investors will agree, whether in property or not, a good strategy is integral to ensuring you are well positioned to create wealth in the property investment market.
Without a clear path for generating cashflow, or wealth in general, you aren’t setting yourself up for success and could run the risk of losing a lot of money in both the long and short terms. Both missed gains, and losses become a major issue for most investors without a plan — and so we have some excellent property investment strategies for you below.
Whether you’re just stepping into property investment, or looking to change up your existing strategy just a little, we have some great pointers for you, and some you may not have even considered.
Take a look at our list of the top property investing strategies below.
Invest and Hold On to Established Property
Our first tip here is to hang on to established property.
This is down to the fact you will be typically able to rely on standard compounded growth of an investment property over time.
That in mind though, you must be as pedantic and calculated as possible when it comes to making these investments. What we mean by this is doing everything in your power to determine whether you’re investing in a property that has the ability to grow value over time, or whether you’re looking at potential losses.
For example, selecting a property with close connections to transport, schools and shopping hubs is a great starting point. However, taking a look at future developments across your city is a great idea too.
With this in mind, you could potentially find a home in an area that is significantly under-developed, though has major infrastructure projects coming in the near future.
If you can get in before these projects launch, or start construction, you’ll be getting a hold of a home at a low price and relying on new shopping centres, schools and leisure facilities to boost your property value over time.
To end — holding property has been a surefire way to see capital growth over the past few decades, with the 30 years prior to 2015 seeing a great annual return of 7.25 per cent.
Buying Off-plan or New
As we’re sure you’re aware, when you purchase new or off-plan properties you’re typically going to find a great deal here.
A vast majority of these investment properties are available at a reduced price when compared to their project selling price when built. That in mind, there is a little risk here in that sometimes projects do fail, or market collapses can occur between the build and the move-in dates.
With this noted, you can still earn back a pretty penny if you keep watch of the market, assess the project developer’s history and work to fight for the best deal possible from off-the-plan developments.
Though one thing we will note is that in areas of high development, such as city centres, for example, is that there is a risk of over-development and an oversupply of apartments or homes.
These issues will then affect your re-sale value or your rental value in that the market becomes saturated and prices tumble.
All that in mind, assess the current market’s standing, the developer you’re working with as well as the sale and investment contracts you’re signing and be sure you’re getting a good deal.
Understand Repayments and Begin to Budget Early
One key tip for new property investors is getting your ducks in a row, so to speak.
You’ll want to kick off your career in property investment with a solid financial grounding, and that means having a good grasp of your finances. A big tip here is to start saving, investing and holding as much liquid wealth as possible before diving into property investment.
When you’ve spent a year or more working on your financial liquidity, and your finances in general, you will be better primed and more of a candidate for investment loans from the Big Four banks.
It’s also worth your while to take a look at affordability calculators from lenders in that these will let you know what to expect to repay when it comes to your first (or your fifth) investment property’s loan.
You can find out more here relating to your repayments, and you’re able to use this data to better prepare and financially strategise for your home loan.
Consider Renovating-to-Hold Strategies
Another key investment strategy when it comes to property is investing to hold.
However — there is a lot of risk involved here.
For this strategy, it’s imperative to be as calculated as possible with regards to value-adding changes to a property. Of course, you’re working to make the home more liveable and desirable, though only to a point where each dollar spent still results in a two or three dollar return in equity.
Renovations can become outlandishly costly, as you would expect, and so you’re always going to want to have a plan in place and be ready to pull the plug and wrap things up if there’s the risk of things becoming too costly.
Always complete the renovation however, even if at a reduced level.
Once you have your renovation completed, you should take a look at your market and assess what type of value has been created and whether it is in your best interests to sell now or later.
One final thing to note is that renovating is time-consuming and costly, and without a plan can cause a lot of financial damage. However, you will often be able to majorly increase rental income and sale value if the renovation is completed correctly.
Consider Property Flipping
With Australia’s property market being so stable and growth-focused, the flipping investment strategy remains a solid one in 2021.
For the keen DIYers and property developer in the making, this might be the strategy that comes off most attractive to you.
When it comes to flipping, you will always want to make sure that everything you’re doing to a home has a profit-focused plan or outcome. That in mind, being intelligent and spending a lot of time planning the renovations here is essential.
Keep in mind that the renovations you’re going to be doing need to appeal to the masses, and of course, that takes a lot of research.
Our final point here is that when investing in a home, be sure that your renovation cost is factored into the final sale price. In some cases, you will find that the cost of the renovation paired with the cost of the property itself cancels out the chance of a good return, and that generates a loss.
When it comes to property investment, there is a lot of wealth to be generated — though also a lot to be lost too.
Our top tips should always be paired with a solid plan and a list of goals. You should always be on the lookout to generate profit and income rather than losses, and if you take the time to diligently plan and calculate how you are going to invest, renovate and sell you are giving yourself more avenues for a win.
Always consider the location of the homes and apartments you’re purchasing and research the surrounding home values extensively and you’re going to be on the right track.
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The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur.
