There is no single best property investment strategy – simply because every investor has a unique set of circumstances.
Property investment starts by planning for success. And while that may sound obvious, it’s an important building block. Simply owning property isn’t enough: successful property investment is all about planning—and this is where many first-time investors stumble.
Our 2022 Property Sentiment Survey found that one in two (52%) first-time property investors are entering the market without a formal plan in place to guide their investment decisions.
But if you’re hoping to achieve your financial goals through property, the best property investment strategies start with thorough planning.
Here are some of the key considerations for your real estate investment strategy, to ensure that you create something that works for you.
The building blocks of your real estate investment strategy
Education
The cornerstone of a good property investment strategy is education. Educating yourself on the type of property you’re looking to acquire, the market you want to enter, and the potential challenges you may find yourself facing.
Accumulating as much information as possible is an important step in your real estate investment strategy, and helps you understand what you’re getting yourself into. And while doing your own research is important, speaking with an industry expert, such as a property advisor, is worth its weight in gold.
Setting your goals
We believe that a tailored strategy is the key to successful property investing.
There are numerous different real estate investment strategies and, after all, property investment isn’t a one-size-fits-all solution. Your financial goals aren’t the same as anyone else’s. So it’s crucial to define your short- and long-term property investment goals. What do you want to achieve with your investments? Different financial goals require different levels of investment, with goalposts that can change along the way.
Choosing your property type wisely
The type of property you choose can have a big impact on your property investment strategy, and deliver varying results. For example, residential property is best suited to long-term capital gains, whereas commercial property can deliver regular, ongoing income from its tenants.
The types of dwelling you acquire can deliver varied results, too. Investing in an apartment may be a cheaper option to begin your property investment journey sooner, whereas a house will typically require a larger outlay, but may deliver more options for growth, and even subdivision, in the future.
Setting a realistic property budget
It’s important to be realistic about your budget when creating your real estate investment strategy. Plan your budget carefully and make sure it takes both your current and future financial situation into account.
For example, your current resources may not actually allow you to buy a property that’s best for your investment goals.
Alternatively, while you might have the funds to invest in the property you’re chasing now, what about the future? You might currently be in a good position, but can you be certain you’ll be able to service your investments one, five, or ten years down the track?
Your tolerance to risk
Risk is different for everyone, so you need to be confident about the level of risk that your investments present. Are you comfortable with the level of debt that your investment strategy is taking on for you, or the timelines that it may take to see returns?
The best investment strategy for beginners and experienced investors alike is one that you can safely manage for the long-term: one that doesn’t put you at risk of financial hardship, or leave you stressed thinking about the future.
Making your location work for you
Most people have an idea of the suburbs they’re targeting when looking for an investment property, but taking a rigid view like this can see you missing alternative options that may serve your needs better.
Often, first-time investors will look for properties in suburbs that they like. But this means that they’re usually looking at suburbs with comparable levels of demand, which leaves them open to the risk of the properties being impacted by the same movements in the market.
Careful analysis of potential investment locations is critical. Consider both current and future supply and demand, as well as planned infrastructure and rezoning.
How many properties will your portfolio hold?
The number of properties you’re looking to hold can determine your real estate investing strategy. But it’s important to do this within your means. Don’t try and add too many properties to your portfolio without being able to service them.
Actively managing your portfolio to maximise ongoing performance
Just owning property isn’t enough to deliver returns; you need to maintain them, and stay on top of your investments as they progress. And this starts with getting the right advice and guidance.
The right advice on your property investment strategy helps you set a clear target, and keeps you on track to reach this target.
It’s beneficial to seek specialist advice at every stage of your property investment journey. From putting a strategy in place to accumulating the property and managing the finance, to maintaining your properties and working towards your long-term plan.
So, what is the best property investment strategy?
The best real estate investment strategy is the one that’s created specifically to meet your investment goals. When undertaken in the right way, it helps to guide your investment process and sets you up for a successful future.
Whether you’re a first-time property investor, or you’ve got multiple properties under your belt, it’s never too late to put a plan in place.
At Momentum Wealth we take a strategy-first approach to property investment and help you build strong foundations that help you work towards your goals.
Get in touch with our friendly team to find out how we can help you establish a tailored property investment strategy that’s best for your situation.
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