​"ANYONE CAN ACHIEVE CERTAIN RICHES
BUT ONLY THE EDUCATED
BECOME WEALTHY
AS TRUE WEALTH IS A SYSTEM & A HABIT OF ACTIONS"
Strategy
The first step in buying your own home or investment property is setting your budget. This will determine how much you can afford and what type of property you can purchase. Your budget will be the influencing factor into the property location as well as the property type, whether it be house & land, apartment, townhouse, duplex or a renovator.
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As you are looking at purchasing a property for investment purposes, your budgeting factor can increase or decrease depending on the asset class. You may be capital growth focused (looking primarily for a significant increase in property value over the long term) vs. income focused (looking for short term positive cash flow with the outlook of moderate long term growth). Either way, as an investor, one should always look long term. Short term factors can be important, and in certain cases, both positive cash flow and growth can be achieved through our investment strategies, but what’s most important is the bigger picture - that is - future capital growth.
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Property investing is all about the time that you are in the market as well as the timing of the market. Unfortunately, we’re not blessed with a sixth sense to know what a specific property in a specific suburb will be worth in a year from now. No one knows what market conditions, trends and economic factors will play over the next calendar year. We strongly advise against investing in a contested and heated market which can result in paying well above market price. Often, the most popular suburbs have already experienced a price peak and boom, and it could be another 7 to 10 years before they achieve a similar cycle. If you invest in these suburbs, you could be paying top dollar for a slow return compared with a less popular suburb.
Stuck on property number one? Building a multi-property investment portfolio doesn’t need to take years of saving, waiting, planning and preparation. What it does require is a passion for property investing, a commitment to learning, and a personalised approach to reaching your financial goals. Thankfully, the first property is generally the hardest and with that hurdle already out of the way, there are a number of routes you can take to reach your financial goals.
There are so many property investment options in the market place today - a myriad of information, expert opinions and so much data at your finger tips, that you wouldn't know where to start. What's right for you as an investor might not be right for another. When you have a specific goal in mind, you’ll be able to decide what type of property is right for you, how many properties you can invest in, and which market will best help you reach your goal. Depending on your goals, aspirations, budgeting and serviceability, we can then customize and tailor a strategy that will best suit your needs.
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At Property Network Partners, we have access to property options such as:​
House & Land Packages
Boutique Terraced Homes
Lease Back Display Options
Dual Income Homes
Duplex & Triplex
Townhouses
Apartment & Unit Projects
Infill & Outfill Land sales
1. Home Ownership: While owning your own home is the most basic form of property investment, it is a strategy that most property owners employ but take no further. And this is perfectly fine providing you employ other tactics along the way during your life to ensure that you are building a nest egg beyond just the home you live in. While your home will no doubt appreciate in value over 30 or 40 years, singularly, the ownership of just your home will not secure your retirement, and your only financial option in this case will be to sell your home and downsize to a small or studio apartment during your retirement.
2. Buy-and-Hold Negative Gearing: This is where you grow a portfolio of numerous properties during an acquisition phase, then hold on to them for at least two cycles of the property market (so, at least 15 years, but ideally longer). Then later in life, you cash your investment portfolio and use the after-tax profits to pay out your existing mortgage leaving you with a tidy nest egg of money to enjoy your retirement. You could also elect to sell half the assets, clear all the investment debt and with the remaining properties, live off the rental income which will be inflation proof (as the cost of living goes up, so too does your rental income).
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Using a negative gearing strategy when purchasing property is one way to acquire a large portfolio where you can maximise the tax benefits. To build wealth you need a large asset base to provide a good passive income so if negative gearing allows you to reach your goals to build your portfolio more quickly, then it may be the best strategy for you.
Note: Negative gearing is unique to Australia where the government allows investors to claim expenses from their property investment off their income before they pay tax. Hence, you pay less tax or the taxman gives you a refund. It is just like having a business, where you are also allowed to take all business expenses off your gross income before paying tax.
3. Positive Cash Flow / Geared Properties: This is where you purchase a property primarily for its income generating purposes. The property value will eventually go up over time as well but that’s not the primary purpose of the property in this case which is to generate you a passive income. Passive income property or positive cash flow property works due to the rental income coming in from the property being greater than the interest repayments and associated property expenses going out. This means that each month, each week or each year you have money left over that you can then use to pay down your mortgage, to reinvest and buy more property or to use towards your lifestyle.
4. Buy, Renovate and Sell (Flipping): Not a strategy for the inexperienced or those who do not like/cannot handle fast-paced madness, buying an unrenovated property, then quickly renovating and selling it for a much higher price before quickly moving on to the next one is not for the faint-hearted. The failure rates are quite high, in the respect that many who set out on their first ‘flip’ property never attempt a second. Some have made lucrative and successful careers out of this, such as "Renovating For Profit" founder Cherie Barber. To succeed long-term with this strategy, you really need to give up your day job and make this your full-time job. The problem for most people is they envisage a lifestyle where you get to pick out cool fixtures and fittings and personalise a property the way you like it. The reality is the complete opposite; you instead become a site project manager and make decisions based on the bottom line and not personal taste.