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Is your focus on the suburb its price point, or does that particular market offer additional opportunity?
Market conditions change, its part of the game. If your strategy is dependent on growth alone, then the time it takes to grow is your biggest risk. If you can do something to the property physically to hasten this process then you have some control on this risk. If you are waiting for the market to do all the work, then you are exposing yourself to the ‘time in the market’ risk most ‘buy/ hold and wait’ investors experience.
Rather than concern yourself with picking the perfect suburb, perhaps focus on your criteria, to ensure the property product is likely to achieve the outcome you desire. If you know what you want from property, you have a better chance of picking a product that is likely to contribute to this outcome. Remember it will take more than one property to retire you (if this is your outcome), so this next investment needs to offer a path to more investment.
Consider how its going to achieve this result, whether you can keep it or have to sell to continue accumulating, and what time you will sacrifice making it so.
As you become more experienced, you will compare only the time it takes to achieve an outcome, not whether or not it will happen. Given enough time, just about any investment will offer some return…
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This reply was modified 9 years, 6 months ago by
Richard.
Richard | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors providing tailored property advice and solutions!
Great question achimy! Agenda free support can be hard to find where businesses are dependent on the money they make from the products/ services they sell. The trick is to:
– Have a specific outcome in mind. What do you want from property? Just participating, isn’t really a strategy. This way you can be have a selection criteria to help qualify the service provider.
– Shop around, buying property is a serious business, its worth making the time to meet with different providers to get a feel for their point of difference. Take your partner with you, if you are going to be making joint decisions, you will both need to feel comfortable the with support at hand.
– Qualify them by their experience. There is little point taking advice from someone who hasn’t done it before, or proven their own success in investment.
– Qualify the nature of their success. Building a portfolio of assets which yield income and equity to retire on, is much harder than renoing a property once and making $50K.
– Assuming you’ve found someone with proven investment success, make sure they are qualified to give you advice. You’ll probably find lots of ‘experts’ aren’t actually licensed to give you personal advice. Why is this important? Well, at least you know there is some regulation of the advice they provide, which means if they act unprofessionally or provide advice which is not in your best interest, there are serious consequences. Some assurance they will do the right thing..
– Ask for client references. Can you speak to a client who has used their service and achieved an outcome in line with their plan? This is important, as it helps you recognise the provider has understood the client’s needs and objectives before recommending an appropriate course of action.Importantly, the responsibility of sourcing the appropriate provider is yours. Given you have done all your reading, work out what it is you want from property and then shop around to find someone who has the right skills to help you achieve it. If you give this process the effort it requires, I’m sure you will enjoy the same benefits other do from ‘building the right team’.
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This reply was modified 9 years, 6 months ago by Richard.
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This reply was modified 9 years, 6 months ago by Richard.
Richard | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors providing tailored property advice and solutions!
I think if you have the capacity to invest, you should be investing, rather than waiting for the most opportune time to buy.
Perhaps ensuring there is a value add option to exploit in your asset when the market rewards ‘value add’ is a strategic solution. Achieving the ‘time in’ requirement, but also taking advantage of the ‘timing’ opportunity in the market when it presents.
Investing also has to be within your tolerance to risk. In this case Tjay would prefer to use savings and afford the potential opportunity cost, rather than add the inherent risk of using a credit card to bridge his capital gap. Much prefer to see him set his own expectations, than add external ones this early in his investing career.
I’m not suggesting risk doesn’t reward, but managing and meeting expectations is critical for a rewarding investment experience. Especially this early in the game!
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This reply was modified 9 years, 6 months ago by Richard.
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This reply was modified 9 years, 6 months ago by Richard.
Richard | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors providing tailored property advice and solutions!
Thanks for the post. I agree with PHP. A good investment should definitely be about growth and yield, with tax saving as a potential byproduct of participating rather than the reason to do it.
Negative gearing (when your income is less than expenses) is one way to reduce taxable income, along with depreciation benefits (the physical building & fittings get older they depreciate in value) to add to the deductions.
A lot of property marketers sell new property to meet this brief, and quite often translates to being either houses located out in the sticks, or inner city apartments. Either means the growth prospects or yield outcomes are loooong term. Generic ‘buy and hold’ for tax returns as a strategy, is a pretty old school approach to market…
Earning good money as a day job, along with the stress involved, suggests he would look to make the most of this potential – sooner rather than later. Creating a plan with a defined outcome and time frame might be a better initial move, as this would spell out the most suitable investment for his goals, rather than his tax return.
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This reply was modified 9 years, 6 months ago by Richard.
Richard | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors providing tailored property advice and solutions!
Hi, thanks for the post.
I’m a big believer in having a strategy in property. Value add can be a purposeful path, particularly as waiting for the market to do all the work, can stretch out your time horison.
I started with accumulation using equity and Lines of Credit like a lot of investors about 8 years ago. I found this limiting as it sucks up your cash flow and the banks eventually stop lending…
Having learnt these lessons, I sold down and dived back in, with a cash flow requirement in my investment criteria. I started by converting single housing into dual living, which meant neutral to positive outcomes, then into shared living property for positive cash flow. Although these options improved cash flow significantly, the cost to reno didn’t always value add because at the time the market wasn’t paying a premium for renos. They only went up in line with the money I put into them, with the yield as the main result.
So even though my strategy evolved to include income, it was still subject to market to create equity for reinvestment. I guess ‘luckily’ for me I was in Darwin at the time and the market did eventually offer enough upside for next steps.
In an attempt to create equity and cash flow at the same time, I moved to Brisbane to access low/ medium density zoned property at an affordable price to start doing small lot developments, which I’m still doing (and help others to do too). The idea is to manufacture equity, but at price that the rent achieved is in surplus of holding costs to create equity and passive income. I’ve done 3 sites already and current working my 4th through DA atm.
The strategy is defined, which means I dont need to worry too much about all the other options in the market while the there is still money in it. Which means I’m head down and channeling my effort working one project into the next. This approach has yielded my best success in property, allowing me to hold what I create and still have enough to reinvest into another site. using the income my portfolio generates to cover cost and provide working capital. Its getting to a point I could live off it if I wanted to, which is great peace of mind – financially speaking at least.
Property is a great market, but there is no easy money. My experience has helped me develop a formula to apply, stick to and repeat. You can learn this for yourself over time or pay others to spell it out for you.
In any case value add is the right option in my opinion, particularly if you want some control on outcome..
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This reply was modified 9 years, 6 months ago by Richard.
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This reply was modified 9 years, 6 months ago by Richard.
Richard | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors providing tailored property advice and solutions!
Hi Wiwin,
lots of info here about how to buy, who can help, not much around what is right for you and whether it will help realise your outcome. Mostly because this different for everyone. Expectations are pretty important, as your first step into property needs to be a positive one in order for you to stick at it and build your portfolio.
What do you expect property to do for you? Are looking to build a base to yield income, or turning over stock for short term gains, there are lots of paths yielding varying returns.
Any approach to market needs to be formulated. Concentrate on the outcome, and work backwards to the appropriate product to achieve this result.
Professional support can provide this clarity, help define the required team, and give you the direction you need to channel your effort.
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This reply was modified 9 years, 6 months ago by Richard.
Richard | PPI Investment Advice
http://ppiinvestmentadvice.com.au
Email Me | Phone MeLicensed Property Financial Advisors providing tailored property advice and solutions!
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This reply was modified 9 years, 6 months ago by
