People talk about property investing as if it is all the same and all
investors have a uniform approach to investing. The only thing that
property investors may have in common with each other is property and
an aim to make a profit. Within investing in property there are several
Strategies for property investing
- Buy to let
- Growth - Investors can have a strategy for capital growth or
cashflow or a combination of these. Sometimes an investor focussing
on possible capital future growth might sacrifice or subsidise
cashflow in the hope of a future pay off.
- Cashflow - An investor buys property with a view to holding
that property for a substantial length of time and making a profit
out of the cashflow from that property.
- Trading - This investor looks for bargain properties and
then purchases them with a view to immediately reselling them at a
better price. Transfer costs can make this a difficult way to make
a living and it is often the novice investor hoping for a quick buck
that enters this market and often burns their fingers. Some people
might call some of these investors speculators.
- Renovation - Some investors would look for dilapidated or
fixer-ups to invest in or other properties that have a good renovation
potential. This strategy is management intensive with higher returns
than the above. The investor takes on the higher risk and higher capital
needed due to holding costs and renovating costs in the hope of realising
a higher profit.
- Development - This investor needs specific expertise or has
to find specific professions to partner with. Here the investor finds
the land, rezones if necessary, subdivides, and develops and sells
off these portions. A small developer might purchase a stand to build
a house and then sell at a profit.
- Growth and trendy suburbs - Some savvy investors are good
at spotting trends within suburbs or cities and then investing in
those areas similarly to the renovation strategy.
- Low management - Other investors will look for low maintenance
property. Blocks of flats can be viewed almost as commercial property.
Property investing can embrace a kaleidoscope of different investment
styles with some investors adopting more than one style or even changing
investment strategies over time based on their needs or changing market