28 Jan Choosing The Investment Strategy That Best Suits Your Needs
The wonderful thing about real estate is that there are lots of ways that you can use it as a vehicle to create wealth. So how do you choose the right strategy for your circumstances?
Over the past few months I have been writing about our relatively strong economy, and the success that many of my investors have achieved in recent years by following my recommendations. I have also written on the importance of timing the market to get the best results, and of having the right mindset. The aim of these articles has been to give beginner investors more confidence to get started on their property journey.
By now you should know why you need to be investing, and have a broad understanding of the opportunities that are available to you as investors in the current economic climate. The next step is to identify the precise strategy that you will use to build your wealth.
Some examples of different strategies would be: doing land sub-divisions, adding granny flats to existing properties, renovating, or investing in non-residential properties.
The challenge as a beginner is that all these different investment strategies sound good in theory, but many carry additional layers of complication and risk that are not always apparent until it is too late and you are fully committed.
My strategy has always to make investing as simple as possible. Low risk and ‘hands off’. I target affordable residential properties that have great potential for capital growth, are self-funding (even at high loan-to-value ratios), are unlikely to cause me any headaches, and will help me reach my long term financial goals.
Specifically, this strategy involves purchasing new properties only. This allows me to target a premium tenant, maximizes my tax deductions, and allows me to anticipate my cash flow much more accurately, as there are far fewer unanticipated expenses than with an established property. And importantly, even though a new property may be a little more expensive to buy, they invariably have better cashflows. This may seem a little counter-intuitive to the beginner investor, but trust me, a premium new build in the right location will always outperform an older, cheaper established property.
The typical investor that I encounter is time poor, with work, family and social commitments taking up much of their time. They are also very sensitive to cashflow, and have a conservative investing profile. If this sounds like you, many of the strategies out there are not going to be suitable for you. For example, structural renovations, or even mild cosmetic ones may not fit your specific investment requirements.
I have always taken the view that even a conservative, low risk strategy can achieve strong results and I have managed to create significant wealth in the past 20 years by following a simple, low risk, ‘set and forget’ strategy. If you want the results without the complication and risk, maybe this strategy is the ideal one for you also.
To learn more, please download for free the first chapters of my latest book at www.rocketpropertygroup.com.au
Ian Hosking Richards is a successful property investor with a portfolio of over 30 properties. He is the CEO and founder of Rocket Property Group, a leading independent real estate agency that helps hundreds of people each year enter the property market or grow their existing portfolios.
For further information or assistance, please visit www.rocketpropertygroup.com.au or call 1300 850 038.