Hi!
Strategy, strategy, strategy... I'm new to property investing and I've been trying to get my head around the 'strategy' aspect of investing for the past couple of weeks/month.
I quickly noticed on this forum that newbies requests for advice (about property or location) would almost invariably be met by the same question from experienced investors: "what is your strategy"?
To a newbie, I think this is a very challenging question.. We are just only barely scratching the surface of property investment, and trying to understand the basics, and here we are asked about, and confronted with metaphysical questions
It disturbed and puzzled me at first. . Now, a few weeks down the track I think I am realising how important indeed this is
So I've set about defining my investing strategy, and with a little bit of help from my friends, I shall succeed
Objective and current situation.
My objective is to 'retire' in 15 years, with say 100k disposable income (gross) per annum (in today's $ value), so about 150k in 15 years assuming 3% average inflation. I am able to put 50k aside per annum, super annuation would be 10k p.a.
Depending on the exit strategy, I guess I need approximatel $5-7M worth of assets? Is that correct? Not sure how to calculate this properly.. Could somebody help me on this by any chance?
My current situation is that I've got one IP (400k) in a Melbourne suburb, luckily attracting a dual rent ($520/mth) and slightly CF+ (4k/annum). I still have a lot of savings available to invest. Deposits for IP 2 and 3, and even 4 should not be a problem.
Strategy.
I think I have settled on a Growth strategy, and will be aiming to holding a neutral portfolio to maintain momentum and serviceability whilst at the same time trying to maximise growth but without taking too much risks. If that makes sense.
I am risk averse by nature but am working on it as part of my investment journey. I understand potential gains and risks are often intimely linked and realise I will have to work on myself to achieve my goals.
Taking this into account, what follows is draft of my shortlisting of asset classes and resources to implement my strategy
The execution will be a combination, and balanced mix of the above.. if I can achieve it.
So far I have ruled out the following strategies or category of assets, and here's why:
Resources I use at the moment:
Kind Regards
Baguette
Strategy, strategy, strategy... I'm new to property investing and I've been trying to get my head around the 'strategy' aspect of investing for the past couple of weeks/month.
I quickly noticed on this forum that newbies requests for advice (about property or location) would almost invariably be met by the same question from experienced investors: "what is your strategy"?
To a newbie, I think this is a very challenging question.. We are just only barely scratching the surface of property investment, and trying to understand the basics, and here we are asked about, and confronted with metaphysical questions
It disturbed and puzzled me at first. . Now, a few weeks down the track I think I am realising how important indeed this is
So I've set about defining my investing strategy, and with a little bit of help from my friends, I shall succeed
Objective and current situation.
My objective is to 'retire' in 15 years, with say 100k disposable income (gross) per annum (in today's $ value), so about 150k in 15 years assuming 3% average inflation. I am able to put 50k aside per annum, super annuation would be 10k p.a.
Depending on the exit strategy, I guess I need approximatel $5-7M worth of assets? Is that correct? Not sure how to calculate this properly.. Could somebody help me on this by any chance?
My current situation is that I've got one IP (400k) in a Melbourne suburb, luckily attracting a dual rent ($520/mth) and slightly CF+ (4k/annum). I still have a lot of savings available to invest. Deposits for IP 2 and 3, and even 4 should not be a problem.
Strategy.
I think I have settled on a Growth strategy, and will be aiming to holding a neutral portfolio to maintain momentum and serviceability whilst at the same time trying to maximise growth but without taking too much risks. If that makes sense.
I am risk averse by nature but am working on it as part of my investment journey. I understand potential gains and risks are often intimely linked and realise I will have to work on myself to achieve my goals.
Taking this into account, what follows is draft of my shortlisting of asset classes and resources to implement my strategy
- Buy established properties in capital cities.
I'm more comfortable with houses right now. Buy well, under value, good land ratio, cosmetic reno only (see below why), probably with the help of Buyer Agents as nothing beats their local knowledge and connections I think (as long as the service price is reasonable 1.5-2% max of purchase price). I kinda like dual income properties too for the extra yield in established areas. Sometimes it's not trouble free though as my first IP taught me.
- Buy new properties (houses) in countryside towns with good yield and growth prospects (QLD, NT) through trust-worthy developers, or value-adding middle-mans. Haven't too found many of those yet, but haven't been looking for very long. Or "Armchair development" approach. Haven't looked into that much yet.
The execution will be a combination, and balanced mix of the above.. if I can achieve it.
So far I have ruled out the following strategies or category of assets, and here's why:
- NRAS. Just seems like additional complexity and risks for not much in return (~5k/annum max).. when compared to the better investments that are available out there, in both yield and growth potential which would/should beat an NRAS strategy by far without some of the NRAS constraints and/or risks. Also, I have NOT been able so far to find an NRAS property that passed my DD or wish list yet, so very hesitant going down this path at this stage. And I've read all 'Euro' posts..
- Renovate. Not a handy man, and I don't think I will like it. Not big renovations at least, cosmetic ones could be OK but it wouldn't make a strong strategy in itself I think. Might start renovating one day if I buy a PPOR that needs work but not looking into this as an investment strategy for now.
- Subdivide/Development. Don't feel I'm ready for this yet. I don't have the knowledge to evaluate opportunities, council policies, risks etc at this stage but interested in it for the future.
Resources I use at the moment:
- General & Specialist info (Property Observer, Matusik, Ryder, Yardney, Deloitte, ABS, ANZ, Westpac reports)
- Online tools and data (Real Estate Investar, Boomtown, Residex, MyRP data, SQM Research, RealEstate, Domain)
- Forums (Somersoft mainly, the other ones just for searches on specific keywords related to researchs)
- Am I getting somewhere here?
- Am going about the "right way" to define a successful strategy for myself?
- How long did you take to define your own investment strategy?
- Do you revise or change our strategy? How often and why?
Kind Regards
Baguette