Property Investment Strategies in Australia
There are many types of methods to increase your wealth using long term property investment strategies in Australia.
Of course there are probably just as many ways to also lose money using property.
It always “depends” on your methodology and advise.
And the problem with property investing advise, in Australia and elsewhere, is, that its just like weight loss.
Everyone just knows the answer.
Overweight people who struggle to walk up a flight of stairs give advise.
And people with no background in property investment also ladle out advise as well.
Its on the internet so it must be legit right ?
At the end of the day(tiresome expression but I still love it) the key is to understand the different investment strategies before you dive straight in and risk your money.
Choosing the right property strategy can be overwhelming, especially if you’re just starting out and talking to different supposed experts(see weight loss above).
Some financial planners might suggest that you rush out and buy new property to maximise depreciation.
Sounds good and practical right?
It is in its essence.
Our rhetorical question is, are they getting any form of kickback for directing new investors to a specific development ?
The reason we are asking this is, there is a problem that is occurring in Australia at the moment.
The essence of their advise might be legit, but is the area/timing of their suggestion predicated by their need to try and push an area/builder that is fortuitous to them, and not so much to the investor ?
Some developers may also suggest off-the-plan properties, while your accountant may advise you to look at older properties.
Fair enough, their are advantages and disadvantages to both methods and ideas.
And its a slightly tricky area when it comes to financial advise from an accountant anyway.
Because they specialise in TAX and not investment.
They have to do another form of certification to become any form of investment adviser.
And, accountants are notoriously “risk adverse” anyway when it comes to long term investment strategies.
The simple truth is, there isn’t just one way to get rich quickly through property.
But in general, there are ways you can achieve financial freedom through property investing.
These are: Capital growth strategy,Cash-flow strategy and Renovation
Lets just talk about Capital growth strategy
This is when we advise our clients to buy a property with the expectation that it will increase its value over a period of time.
It’s a long game plan strategy where you focus on getting maximum capital growth and making that as your priority.
In theory , the capital growth strategy involves minimum effort after purchase but the sting in the tail is the research beforehand must be done well.
Hence people should use a team like Ample Property Solutions and utilise our time, energy,connections and our knowledge.
The hardcore money work is the time consuming research beforehand.
You want to find those markets right now, that are ready to experience high growth in the future.
Also a clients timeframe for holding any particular property can also impact what they are going to buy, so it’s important to be clear about your strategy first before looking for a deal.
Investors have to assume values will go up over time.
Thats a given, and in this country, its a fact in most areas, over enough time.
A short to medium timeframe, for example, is one where your property grows in value over a 1-5 year period and then trading it back to the market or selling it to realise an increase in equity with attendant tax “problems”.
But for this strategy to work, you want to focus on an area where you can see a short-term major boost or buy in an area which is on the verge of an upturn to ride the impending growth.
A long-term buy and hold strategy which is exactly what we advocate means you are buying into an area where you can see the ongoing desirability of the area, where there will be continual demand and multiple reasons why the market has the potential to keep growing.
Reaping the benefit of long-term growth in value is the magic key to long term financial freedom.
You also can get the benefits of negative gearing.
In general, capital growth strategy means buying in desirable areas which have a long-term growth prospect.
As such, property prices tend to be higher compared to the rental income it derives, which produces a cash flow shortfall that you can then claim against your other income.
Because of its higher price tag, with this form of investing of course, you’re likely to have to cover property-related costs such as mortgage repayments and maintenance issues out of your pocket.
Yes it is difficult to time entry into the market.
But since you’re trying to maximise the capital growth of your property within the shortest possible time, you want to buy at the bottom and sell at the peak of the market.
Which is just a truism but it sounds good.
In hindsight !
As you outlay more capital into supporting a negatively geared property, you may end up not being able to borrow further as you reach your maximum serviceability.
Which would suit investors if they have a high income, plenty of time and ability to hold the investment through good times and bad.
As the name suggests, a cash-flow property investment strategy is where the priority is, cash-flow.
This means there’s less focus on capital growth and other strategies such as renovation or development, although they’re also often considered.
A cash-flow strategy can help those trying to supplement their income.
And who amongst us is not trying that ?
Typically, a cash-flow strategy is where the investment property generates more in rental income than the cost of mortgage, property management, rates and other maintenance costs.
This strategy is generally favoured by many(most ?) beginner investors.
The advantage is you can get a higher borrowing capacity.
And you end up with a greater disposable income that enables you to borrow more to invest in the future.
Look, we are here to show you a great way of building long term security for your family
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