What’s the best property investment strategy for you?
If you google property investment, go to a seminar or pick up a magazine, you’re going to come across those purporting to know the best way to invest into property. But different types of property investment work for different people depending on their personalities and investment strategies. Here we list some of the more popular investment strategies that you’re likely to come across that have been a success for people in the past.
Most of us have heard of The Block TV show. Contestants find an old rundown house and through smart design, careful research and a lot of sweat and tears, turn the dump into a jewel of a property. Shows such as this have led the number of people renovating to go through the roof. When you once had a run down property that no one wanted, competition is now fierce causing prices to skyrocket. The renovator is finding it very difficult to find value in the current market and is often finding themselves overpaying for their next projects. Beware costs of getting in and out quickly as they can erode much of your profit.
Your brother is a carpenter, your best friend a plumber and your uncle was a tiler. You’ve got trades all around you that you can tap into for work that’s cheap and you can trust. If this sounds like you, you may be tempted to find that property that needs to be bulldozed and replace it with a shiny new duplex. But much like the renovator, finding value is very difficult in the current market. More and more buyers are competing with advantages similar to yours, and you’ll notice that those bidding at auctions are fellow builders, rather than developers. By being in or close to trades, you can push your margins up, but the risks are much higher than they used to be.
The long term hold and buy – active style
You don’t have the time to renovate and lack the contacts to do it cheap. But you’re happy to research and stand by your convictions. Returns can be solid if you pick the right property, in the right area, and hold it for the long term. But beware that 80% of people who buy their first property this way will buy within 5 kilometers of where they currently live or have lived, citing that “knowing the area” gives them an advantage. Your backyard isn’t always the best place to keep your money. This decision is similar to saying that since your home phone is with Telstra, you should buy Telstra shares.
The long term hold and buy – passive style
Not everyone has the time to research the property market and to spend their weekends trawling from open home to open home. You’d like to buy a quality property and sit on it for the long term, but it’s too much time, effort and skill for you to consider. In this case, you could reach out to a buyer’s agent or property consultant to help you. Look for a property professional that doesn’t just help you find the right property, but the right property, in the right location and suited to your investment strategy. Ensure that any recommendations presented to you are backed by solid research so the property provides consistent income and long-term capital growth.
You may also like
Owning a home is the great Australian dream. But what can you do if you can’t afford a house? Find out your investment options.Read more
While trusts offer protection and flexibility, there are downsides to consider as well. Find out if buying a property in a trust is right for you.Read more