5 property investment strategies
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 to build a successful investment portfolio.
Here's 5 of the most 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. Ideally, your property value will increase beyond what you invested but it can take time.
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. Selling the property with a profit in a short time frame is a key goal here, but it can be difficult. You have to factor in a lot of variables like the area you buy in, market trends and the type of renovations you do. Read our article tips to maximise the sale price of your home for some quick suggestions.
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.
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.
Whether you're ready to purchase an investment property or just have some questions about what's involved, talk to one of our home lending specialists today. Enquire online, visit your local branch or phone 13 14 22.