Investing in property: what strategies are out there?

When investing in property you need to be clear with yourself on how you intend to make money from the investment. Doing your research and planning out a strategy for your property investment will help you to keep focussed on the path to building a successful investment portfolio.

Capital growth vs. ongoing rental return

Have you decided on whether you will aim to make money via capital growth or ongoing rental return? Potentially, you could find a property which offers an opportunity to do both.

Capital growth is the profit earned when a property is sold for more than it was purchased for, while ongoing rental return is the regular income received from tenants who pay to rent the property over a leasing period.

5 popular property investment strategies

1. Home ownership

This is one of the most basic property investment strategies whereby you live in the property you have invested in.

2. Buy-and-hold

Where you grow a portfolio of numerous properties during an acquisition phase and hold onto them, with the hopes of selling them after a long period of time (at least 15 years) to make capital growth.

3. Buy, renovate and sell – AKA ‘flipping’

Not one for the faint hearted. This involves buying a property and turning it around in a short space of time – usually within a year – after doing some hard and fast renovations.

4. Renovate and hold

Buy properties that need work, do the work and hold onto them for a number of years – usually through renting the property out at a higher price than what it would rent for when you bought it.

5. Full-time property development

Buying a property and developing it into a block of units is a great example of this and can be a full time job. Often suited to those in the building trade or older investors with a strong portfolio, this has become a popular strategy for investment over the last few years.

There’s no stupid questions when it comes to purchasing an investment property. For more information come and see one of our home lending specialists in branch or phone 13 14 22.

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* Based on a $150,000 loan over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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