Personal Strategies for Investing in Property

When it comes to property investment there is no definitive blanket approach. What can be tricky is the fact there's no single method for success. In the end it comes down to personal circumstances and what’s right for each person at the time of investment. Having been in the property industry for almost 20 years I’d like to share some personal strategies and experiences that have worked for me when investing in property.

1. Look for potential

I’m a firm believer that if an investor has the time and capability to take a property to the next level by adding value, they should use this to their advantage. Adding value through renovations and presentation can reap great returns, both in terms of capital growth and rental yield. I’ve personally bought and sold several properties, from one-bedroom apartments, to inner-city terraces and in each instance, I was able to extract value above the market through this technique. There can be two goals; attracting a better rental yield through presentation, furnishing or inclusions or renovating to sell. Whilst there is cross over in renovation strategies between the two outcomes, one would normally expect to invest more for capital growth than to maximise rental yield. Don’t overcapitalise. The renovate and hold strategy, although a longer-term play, could see you increasing your equity over time. This might help you get on the right foot for an additional investment.

2. Research Thoroughly

Before starting or adding to your portfolio, research should be the first measure you take. The best part is once you have the basics down it’s hard to go wrong. Here’s some pointers to get you started: look for areas with expected market growth, proximity to public transport and depending on the demographic you are looking to target make sure it has easy access to schools, amenities or a cultural hub. These factors will play a huge role in securing a quality tenant, or buyer. Take time to visit both rental properties as well as those for sale, to give yourself a good understanding of what types of properties attract tenants, what’s popular and what kind of interest are they attracting. Look at a cross section of non-renovated, well presented and fully renovated properties above and below your guide, to give you a better sense for the wider market, and areas to potentially add value down the track.

3. Buy Local

When getting started, a safe strategy is sticking to what you know! If you are already living in a good area, or have a solid understanding of the surrounding markets, make the most of your insider knowledge. As a local you will have observed the market, the current conditions and will be more attuned to what’s happening. Being a local may also help with renovating, with easy access to the property and trades that you may already know in the local area. As the saying goes, you make your money when you buy the property, not when you sell it. Your entry price is more important: the better the entry price, the better the exit price. Use your local knowledge to your advantage.

4. Plan Your Exit

Know what you want from your investment before you are tied in. Are you interested in a long-term approach? Such as holding the property and leasing it for many years, until its value increases whether through renovation or positive market conditions? Or do you want to flip and sell before moving onto the next property? If you haven’t decided yet, then make sure you work this out first before you spend your Saturdays hitting the pavement and going to opens. Have a clear goal and strategy in mind. All the factors you chose for your investment strategy will come into play when doing your calculations regarding the rental, renovation and importantly, if and when to divest.

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