Do You Have A Winning Strategy?

“If you don’t have a winning strategy, you will never build a successful property portfolio”, I was told by a mentor many years ago. That advice has proven to be true. Property investing is not an exact science but there are some important fundamentals in the process when considering the purchase of an investment property. Getting these wrong may well limit your portfolio to a single property, but having a winning strategy will enable you to build a strong, well-performing property portfolio.

Most people end up with just one investment property and it’s a direct result of a lack of thorough research, a lack of understanding of the property market and how market cycles move, unrealistic expectations of the investment and emotional buying.

While research is a vital part of the process, care needs to be taken that there is not too much emotional emphasis placed on the ‘location’ of the property. It’s a common mistake for investors to look in areas that are familiar to them and miss exceptional opportunities that are outside their preferred location.

Take this example of a recent client:

Helen had pre approval for a $420k loan and wanted to buy an investment property in Sydney because she lives in Sydney and felt more comfortable buying in a familiar area. After looking at property for just over 12 months, Helen realised that the only type of property she could afford was an old, unrenovated apartment in a less desirable suburb. There was concern around potential maintenance issues and the type of tenant an older run down property might attract. Another issue was that the yield would be just over 2%, making the property negatively geared.

Frustrated with her results, she got in touch. Together we formulated her winning strategy, according to her stated needs. Helen needed a high yielding positive cash flow property with high capital growth prospects as she wanted to keep growing her portfolio as quickly as possible.

This strategy meant that she needed to move away from her emotional attachment to Sydney and focus on the right property for her needs.

To make the best suburb selection in line with Helen’s strategy, I consulted online property software platform, Ripehouse.com.au. The program was then able to specifically target the areas within our chosen suburb, set for standout growth and high yield.

The decided on location was a suburb near Newcastle, where the most in demand property type was 4 bedroom, 2 bathroom and 2 car garage houses. The software was able to generate a shortlist of suitable properties in Helen’s price range, from which one was selected for purchase.

The asking price was $409k on the 5 year old property and, after negotiation, the property was secured for $385k, a whopping $24k off the asking price. The property now rents for $390 per week. It is important to note in this example, that the estimated equity value in the first 12 months is $66k and the current rental yield in a rising rental market is 6.1%.  

This achieved Helen’s winning strategy of purchasing a high yielding, high capital growth property and will enable her to purchase her next investment property in the next 12 months.

It is crucial to keep an open mind when it comes to investing and it’s having the winning strategy that will build a successful, high performing property portfolio.

Editor Note: Julie has an amazing story. She has built an enviable portfolio, achieved on a single income whilst raising two children. Julie now devotes her time and attention to helping others secure their future via her business Australian Property Investment Solutions. As part of this buyers agency business, she uses best practice research tools + her expert knowledge of property and negotiation, to deliver amazing results to her clients.

Book a free and no obligation portfolio strategy session with Julie Today.

See original article here: http://www.apimagazine.com.au/property-investment/do-you-have-a-winning-strategy