Having a solid plan before going into any investment is essential as is using trusted experts to help you establish that plan …. your investment needs wants and budgets.
Know what you are aiming for before you start the property investment journey.
Each of us has specific goals but we all have the dream of retiring as early as possible and have a passive income that will provide us with the lifestyle we so want in our later years.
Establishing A Strategy.
When it comes to establishing a plan of action, I always recommend that my clients decide on a short, medium, and long term strategy - or indeed a mix of all.
Keeping in mind that having a diversified property investment portfolio is a good idea.
Now, in defining the time of short, medium and long term, they are generally seen as:
Short-term: 12-24 months
Medium-term: 2-5 years
Long-term: 6+ years
Next, when constructing your plan for each stage remember that property cycles usually take 8-10 years to go through a complete cycle. Read more about property cycles.
Short-Term Strategy.
A short-term strategy would involve buying an old, established dwelling then renovating and on selling it in a relevantly short space of time. This strategy comes with many risks and hidden costs. Read more about the renovation strategy.
Medium-Term Strategy.
A medium-term strategy would be very similar to a short-term strategy only one is giving it a little bit more time to grow. Again, relying heavily on luck and getting the timing of the property cycle correct.
Long-Term Strategy.
The best results are invariable using a long-term strategy with significant capital growth of property generally coming in the later years of the cycle.
The most successful property investors hold their investment properties for the long term who have carefully selected the right property, at the right time of the cycle for the right price.
These astute investors then benefit from their smart property selection, giving them the ability to use the equity gained in the first investment to purchase another one, two, or three plus properties.
How To Minimise Risk.
Having a long-term vision it will not only significantly reduce the risk but will also allow you to sit back and watch the capital growth occur for the property.
Should You Revisit Your Strategy?
When you do have your long-term strategy in place you must revisit the strategy and investments on a regular basis to ensure milestones are being reaches and performing as predicted.
Long term investors who have purchased property multiple times have generally had enough experience to understand the chaff from the wheat and understand what and when to hold and what and when to sell.
Remember, all good things come to those who wait. Investing wisely in property comes with a lot of patience and working with a great support team on your side irrespective of which strategy suits your needs
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Warren Jacobs - Senior Property Investment Consultant at Meridian Australia
P: (02) 9939 3249
Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your individual circumstance.