Property Investor, Property Mentor, Buisness Advisor
We Help People Build Sustainable Property Empires
Residential Property Investment Strategies
The Best Property Investment Strategies for a Secure Future
If you're looking for a way to secure your financial future, property investment might be the right choice for you. While there are no guarantees in life, investing in property can give you a number of advantages that other investment options can't match. Here we'll explore some of the best property investment strategies to help you get started. At Levoune Buyers Agent we focus on helping investors achieve investment success with these strategies.
Why buy a property?
As a guide to property investment, people often have different reasons for buying them. Some want a physical asset, while some want to buy an investment property in a particular location because they love the area. Others are more interested in the investment potential of a property. And some people simply want to buy a property that will give them a good return on investment in the long term. Not only property investors, but also home buyers need to understand investment property strategies in order to make the best decisions for them when buying real estate.
One key reason to invest in property is that it can be a more stable investment than other options such as stocks and shares. Property values tend to go up over time, so you can usually expect to see a return on your investment if you hold onto the property for a number of years. This makes property investment a good choice for people who are looking for a long-term investment. But you can buy the wrong investment property and still lose money, so it's important to do your research and invest in the right property.
Benefits of real estate
1. Cash flow – this is the most important benefit for real estate investors as it can provide a consistent and passive income stream.
2. Appreciation – over the long term, real estate typically increases in value, providing investors with the potential for capital gains when they sell.
3. Tax benefits – real estate investors can enjoy a number of tax benefits, including the ability to deduct expenses like real estate taxes, maintenance and more.
Diversification with investment properties
Reduce Risk to succeed
When buying a property, your aim is to reduce as much risk as you can. One of the best strategies for investing in property is to diversify your property portfolio. When you invest in a property, you're taking on a certain degree of risk. By spreading your property investment across a number of different properties, with residential real estate you can reduce the risk that anyone's investment will tank and cause you to lose money. This is known as diversification, and it's one of the smartest things you can do when investing in property.
1. Invest in different types of property
2. Buy in different locations
3. Consider separate entities
4. Don't put all your eggs in one basket
5. Consider different price ranges
6. Have realistic expectations
7. Buy in different price ranges
The difference between long term and short term property investing
Although property can be a great way to secure your financial future, there are different strategies for different investment goals. If you're looking for short term investment returns, then you'll need to take a different approach than someone who's investing for the long term.
Short term property investment strategy
1. Location is key
2. Look for investment properties that need work
3. Consider the rental market
4. Have a realistic exit strategy
5. Always do your research
6. Buy under market value
7. Have a professional property manager
When considering short term investment property, you will consider strategies like buy and flip, developments etc. These strategies can be riskier than investing for the long term, but they can also be more profitable if you know what you're doing and make the right investment decisions. Buying the wrong property or overpaying for a property can quickly eat into any potential profits.
When investing in property, one of the most important things to consider is your return on investment, or "Roi". This is a measure of how profitable your investment is and can be calculated in a number of ways, depending on the goals of your investment. For example, if you're looking for a short term investment, then you might focus on the resale value of a property after you've renovated it.
Long term property investment strategy
1. Look for properties with strong investment potential and stable long-term growth prospects
2. Consider investment properties that will be positively affected by changes in the local area
3. Look for investment properties with good rental potential and high cash flow
4. Have a clear investment plan and stick to it
5. Look for investment properties with good potential capital growth
5. Consider using a property investment company or buyer's agent to help you choose investment properties and manage your portfolio over the long term.
When considering a long term investment property, you will consider strategies like buying and holding, buying and renovating. These strategies might take longer to see a return on your investment, but they tend to be less risky in the long term. If you're looking to generate rental income, then your focus might be on the monthly rental return. And if you're investing for the long term, then you'll need to consider factors like the capital appreciation of your investment to calculate your Roi. Ultimately, the key to a successful investment is understanding what you're aiming for and choosing investment properties that will help you meet your goals.
Without goals, you have no direction and without direction, you have no strategy.
Lending Lending Strategy
As a property investor, it's important to have a solid lending strategy in place with real estate. This will help ensure that you're able to buy investment properties that align with your goals and investment strategy, while also keeping your finances and investment portfolio well-managed. If you're looking to build a successful investment property portfolio, it's important to remember that it takes time, patience and a lot of learning. 90% of property investors never get passed their 2nd property whereas only 3.8% get passed 4 properties.
But I want a big portfolio? Why is it not easy to get this information?
If you are wanting to build a considerable investment property portfolio when building a lending strategy in real estate you need 4 professionals to help you achieve it successfully. A Mortgage Broker, solicitor, accountant and Mentor.
Your mortgage broker will help you find the right loan products to suit your needs and goals, as well as give you advice on how to best manage your investment property portfolio.
A solicitor will help you with the legal aspects of property investment, such as contract law, conveyancing and stamp duty.
An accountant will help you with tax-related issues, such as structure used, negative gearing and capital gains tax.
A mentor will help you with the overall strategy and direction of your investment property portfolio. Lending strategy is one of the biggest things when building a portfolio. You will find as your portfolio grows, your lending strategy becomes more important. This is because you will need to make sure that your loans are structured in a way that is tax-effective, increase serviceability and will help you achieve your long-term investment goals.
There are many things to consider then property investing, real estate, property market, investment strategy, rental income, capital appreciation, and return on investment. These are just a few things to think about when looking at property investment. With the right investment strategy and knowledge, you can use property investment to secure your financial future and grow your wealth.
Mortgage structure
When you have rising interest rates, it is important to ensure that your investment property loans suit your needs when buying an investment property. This means finding an investment property loan product that works well with the type of property you're investing in, whether it's a principal and interest loan or an interest-only loan. Interest rates may influence your decision on what type of loan to choose as well as the amount you're able to borrow.
An interest-only loan may suit your investment property if you're looking to maximize your cash flow when you have a steady rental income stream, while a principal and interest loan is generally better suited for those who want to build equity in their investment property. It's important to speak to your mortgage broker about the best loan product for you and your circumstances to save money.
Buy and Hold Strategy
One of the most popular residential property strategies is known as buy and hold. This involves purchasing a property with the intention of holding onto it for a long period of time, typically 5-10 years or more. This can be an ideal strategy if you are looking to generate rental income over the long term and build capital growth in your property. It can also be a good choice if you are not interested in actively managing your investment property and would prefer to leave that to a professional property management company.
One of the key benefits of the buy and hold strategy is that it can provide a passive income stream, which can help to supplement your current income or even replace it entirely over time. Additionally, real estate tends to be a more stable investment than other asset classes, and this strategy can help you build wealth over time through capital appreciation of your property.
However, there are also some potential downsides to this investment strategy. For example, if the real estate market is not performing well in your area, you may experience a loss in capital growth on your investment property. Additionally, you will need to be able to make payments on the mortgage and other associated costs even if your property is vacant or generating no income.
Buy and Sell Strategy
An alternative strategy is known as buy and sell. This involves purchasing a property with the intention of holding it for a shorter period of time, typically 2-5 years, and then selling it to generate a profit. This can be a good strategy if you are looking to make a quick return on your investment or if you are comfortable with the risks associated with a short-term investment.
There are several key benefits to using this strategy. For example, you will likely see an immediate return on your investment and can potentially profit even if real estate prices in your area are flat or declining. Additionally, you may be able to benefit from price appreciation over a shorter timeframe than with the buy and hold strategy.
However, there are also some potential downsides to choosing this approach. For example, you will be subject to various costs and fees associated with buying and selling a property, such as stamp duty, property tax, legal fees, real estate agent commissions, and more. Additionally, if the Australian property market prices in your area take a sharp decline, you may end up selling your property at a loss.
Buy and flip Strategy
Another strategy that you may consider is known as buy and flip. This involves purchasing a property, renovating it, and then selling it for a profit, typically 6months - to 1 year. This can be a good strategy if you have some experience with renovations or are comfortable working with a contractor to get the work done.
There are many key benefits to using this strategy. For example, you can potentially add significant value to your investment property through renovations and increase your return on investment. Additionally, you may be able to benefit from price appreciation over a shorter timeframe than with the buy and hold strategy.
However, there are also some potential downsides to flipping properties. For example, you will need to factor in the cost of renovations into your budget and there is always the potential that something could go wrong during the renovation process. Additionally, you will be subject to various costs and fees associated with buying and selling a property, such as stamp duty, property tax, property expenses, legal fees, real estate agent commissions, and more. You will not get the 50% CGT reduction if you sell before a year, this could cost you 10s of thousands of dollars.
Buy and Development Strategy
Buy and Development is another strategy that you may want to consider is known as buy and development then instantly sell real estate. This involves purchasing a property with the intention of developing it and selling it for a profit. This can be a good strategy if you have some experience in the property development industry, understand property markets or are comfortable working with contractors and developers.
There are many key benefits to using this strategy. For example, you can potentially add significant value to your investment property through the development and increase your return on investment. Additionally, you may be able to benefit from price appreciation over a longer timeframe than with the buy and hold strategy.
However, there are also some potential downsides to developing properties. For example, you will need to factor in the cost of development into your budget, and there is always the potential that something could go wrong during the development process. Additionally, you will be subject to various costs and fees associated with buying and selling a property, such as stamp duty, property tax, fees associated with your development application, legal fees, real estate agent commissions, and more.
Dual Occupancy
Dual occupancy is when you purchase a property with two dwellings on it, such as a house with a granny flat or a duplex. This can be a great way to increase your rental income and potentially even your capital growth, as you will effectively be buying two properties in one.
However, there are some things that you need to be aware of before you consider investing in dual occupancy. For example, you will need to make sure that the property is zoned correctly for dual occupancy and that you have the necessary approvals in place. Additionally, you will need to factor in the cost of construction into your budget and make sure that you have the right insurance in place.
If buying established properties with a view to renting one out and living in the other, you will also need to factor in the cost of maintaining two properties. This can include things like repairs, landscaping, and more. Potential strata fees may also apply. Despite these considerations, dual occupancy can be a great way to increase your rental income and capital growth potential.
Capital growth vs Rental yield
When it comes to property investment, there are two main ways that you can make money: capital growth or rental yield.
Capital growth is when the value of your investment property goes up over time. This can happen for a number of reasons, such as population growth in your area, infrastructure development, and more. If you sell your property for more than you paid for it, then you will make a profit from capital growth.
Rental yield is the other way that you can make money from property investment. This is when you receive rental income from tenants who are living in your investment property. The amount of rental income you receive will depend on a number of factors, such as the location of your property, the type of property, and more.
Buying interstate or offshore properties
Another strategy that you may want to consider when investing in property is buying properties in other states or even overseas. While there are some risks associated with this strategy, there can also be some great rewards. Not all property markets grow at the same time and when interstate property prices rising straight in the upward direction, this can lead to some fantastic opportunities for investors.
With this strategy, a successful property investor in real estate investing will need to engage a licenced real estate agent who specialises in property managers to look after the property for you as well as a solicitor who is licenced to practise in that state or country. Additionally, you will need to make sure the local real estate market has a rental property shortage and that your local real estate agents can direct you. Depending on the market property management fees can be expensive and can eat into your profit.
When you buy in the right market at the right time crucial factors favouring investing in interstate or even international property markets, you can make a lot of money from capital growth. Additionally, if you purchase in an area with high rental demand, then you can potentially earn a good income from your investment property as well.
0434 211 016
Copyright © Levoune Buyers Agent 2022.