Investing in property can be a great way to achieve financial freedom or to put a little
bit of extra money into your pocket but when it comes to investing in property there are
a lot of different strategies you can use to achieve success.Now not one particular
strategy is the way to go ,you can achieve success through all of these strategies.So
today I want to highlight 10 of the common real estate investment strategies that you
can consider when it comes to deciding how you want to invest in property .Hi I'm Ryan
from onproperty.com.au your daily dose of property education and inspiration.Every single
day I released a new educational video podcast and article as well as a new positive cash
flow property for sale which I have found for you and listed on the website , so you
don't need to go trawling the Internet on real estate.com.au for the next 7 hours to
try and find a property just head over onproperty.com.au/138 to see today's property and that is a property
that is listed $265,000 and it is on the Gold Coast where I live .So it's not in some regional
centre which one of them are both on the Gold Coast and is currently estimate to rent for
$430 per week, so that's an 8.44% rental yield so that's pretty exciting .So again you can
find that at onproperty.com.au/138or if you're listening to this in the future are all that
properly done is doesn't sound perfectly you can see our full list of properties by going
to onproperty.com.au/properties.So that something I'm doing a April testing out if a lot of
people find this valuable find this interesting then I'll go ahead and keep doing it.Sso that
something that you like go-ahead check it out .So 10 common real estate investment strategies.Wwhat
are they what are the benefits of each individual strategy and what sort of person do you need
to be to go about investing using these particular method.
So method number one is your buy and hold strategy.So this is a pretty common strategy
I would be , I can't say specifically because I don't have the data on it , but I would
say that this is the number one investment strategy used in Australia and basically all
it is, is purchasing a property in order to hold that property for the long term .You
may be purchasing the property for rental income or you may be purchasing a property
for capital growth that doesn't really matter, it's still going to be called buy hold ,if
you're buying it and holding it for a long period of time .So this is extremely common
because as I say property tends to double every 7 to 10 years so you can get a great
capital growth out of it and also rental incomes tend to go up over the years as well which
means overtime you keep getting more and more rental income from the property and someone
else can pay for your mortgage for you if it turns into a positive cash flow property
so buy a whole is extremely common it's a pretty simple way to go as well because you
don't have to know a great deal about how to renovate or how to do **options** or how
to do all these funny things which is pretty basic, you buy hot property ,you're holder,
you are selling in the future ,you keep it for the rental income.
Matter number two is renovation and that is purchasing a property in order to spruce itup
put in some TLC some tender loving care and improve the value all the rental income of
that property through renovation .Now this can be as simple as doing a cosmetic renovation
we go in and you put in a new carpet and you paint the walls and put a new front door and
simple stuff or it can be as extreme as changing the layout by removing walls or moving walls
and adding extensions to the property so renovation is a common strategy used by a lot of investors
and all other times it will be to purchase a property renovated it and then flip it or
on sell it as quickly as possible to make a chunky profit and then move on and do another
renovation as well So this can be a very profitable strategy but obviously it involves some good
old **elbow grace** ,get in there and doing some work even if you're contracting out you
still need to manage the project and so technically it still work though maybe I wouldn't classify
it as **elbow grace**.
All right, method number three is dual occupancy.
Now I sat down with Rachelle and Nicol who are town planner here on the Gold Coast which
is where I live .Best place I just moved here six months ago.
It's awsome, I love it, but I sat down with them and we talked about dual occupancy and
how to create a dual occupancy .You can check that out by going on property.com.au/134 the
episode 134 if that is something that you are interested in . Now dual occupancy is
creating two or more rental incomes from one property ,so it's two or more dwellings from
one title, I guess would be more specific so that may be by
adding a house or adding a granny flat onto the back of your property or it could mean
simply slimming your property so downstairs is one self-contained living area and upstairs
is a second self-contained living area or the front is self-contained and the back is
self-contained, you get the idea, basically you're getting multiple rental incomes on
one title and so that's dual occupancy and that can be very profitable investment strategy
in terms of rental income and can actually help when you come to sell your property as
well because the one house can have multiple uses or generated income for the people buying
it.
Method number four is subdivision and so this is where you take a property or a block of
land and you draw a line down the middle and you turn it into two separate titles.So this
means that one blog can now be sold off or can now be developed on and other block stands
on its own as well so that effectively you're taking one title and you're turning it into
two titles with smaller blogs of land.
Subdivision is an expensive process to go through,I'll have to do an interview to find
out the full cost for you and I'll go back to Rachelle and Nicol from peertheurbanplanning.com.edu
and they'll tell me how much it costs to do subdivision.
I think it's around the ballpark figure of about $30,000 or more to get a subdivision
done but obviously if it's going to be profitable then if you're spending 30,000 and you're
going to make another 30,000 or more probably worthwhile thinking about it.
Method number five common real estate investment strategies is development and that's really
taking subdivision to the next level .So rather than just subdividing you might take a block
of land and build townhouses or villas or units and then go ahead and** strittle title**
those.So basically rather than just renovating property rather than just drawing that line
in the sand to subdivide you're going ahead and you're building multiple dwellings on
you know what is one block of land or could be multiple if you subdivide, but basically
you're going ahead and you are doing a larger scale developments and that's extremely common
among investors especially as you tend to get on in your investment journey once you
earn two or three or more investment properties it can be extremely looking lucrative to do
these developments but then often you need a larger cash outlay in order to get them
going.So if the newbie investors, they are kind of a bit out of reach, you can't really
get to them, but the people who have done a few properties successfully in the past
seems to be a natural progression into development a lot of those investors.
Number six is positive cash flow properties and now this is I guess a spin on buying halt
because technically positive cash flow properties you're still buying and holding them but you're
buying them specifically for the positive cash flow that they spin off.So this could
be the positive cash flow from day one or it could be the positive cash flow that allows
you to pay off a mortgage so the property is purchased for you.
But basically positive cash flow property is property that generates more in rental
income and you are paying in expenses and that leaves some passive income leftover that
you can spend on whatever it is you want to spend it on.You could give it to your favourite
charity or your church you could use it to reinvest you could use it to pay off the mortgage
you ccould use it to pay for your lifestyle and a lot of investors will either go about
investing using positive cash flow property to achieve financial freedom or they'll invest
using method number seven which were about talk about ,negative gearing and then in the
future when I've got no equity growth and they'll sell off some properties and turn
the remaining properties into positive cash flow properties for that rental income.
So positive cash flow properties are the probably the method that I love the most because I
just love that idea of passive income coming in that you don't really have to work for
and passive income that can actually grow over time as rents increase and as you pay
off your mortgage.
Method number seven is negative gearing and so this is the opposite of positive gearing
and it's still in line with that buy and hold strategy we talked about in method number
one ,but with negative during the rental income that you receive is less than the expenses
that you are pying which means you need to pay money every single month out of your wage
and out of other income to keep that property going because otherwise you default on your
mortgage.
The idea with negative gearing is that you lose money for a certain period of time but
the property goes up in value so that when it comes time to sell you make much more money
back.
**Severely equivalent state** paying $1000 a month to this property and you do that for
two years that $24,000 but if that property goes up $500,000 then you've got $76,000 in
equity there because you know, you've only payed the 24,900 **instead** 76 , obviously
you have fees and stuff when you sell, the goal is the property will grow faster than
the money you're putting into it or potentially the goal could be that overtime rents will
increase and that negatively gear properly will turn into a positive cash flow property.
Method number eight is commercial real estate so this is different to residential real estate
in quite a few different ways.
firstly when it comes to lending, you are likely to need a larger deposit the commercial
real estate with residential the goal always seems to be a 20% deposit and this allows
you to avoid lenders mortgage insurance, but when it comes to commercial property it tends
to be around 30% deposit that you need.
But the benefit with commercial property is there multiple different benefits but probably
the main benefits are that the leases are much longer on a lot of commercial properties
so rather than tenants signing a six-month lease the tenant might sign a three-year or
a ten-year lease on that property , so you've got more security of income in some circumstances
and on commercial property as well it's usually the tenant's responsibility to pay for all
the outgoings, so you're talking about water, council rates even things like repairs and
maintenance become the responsibility of the tenant's.
So in commercial property you may have the same yield as a residential property , but
you may have less expenses because more expenses are covered by the tenant, so this could mean
greater cash flow for you.
Matter number nine is house and land packages, so this is when you buy a block of land but
you've got approval already done to build a house on and build contract in place to
build that house.
So you see the signs up everywhere, well at leats you see them where I live in the Gold
Coast, house or land from $425,000 .Hourse or land from $399,000 and basically what you're
doing is you're buying a block of land and that is going to
be built on and deliver a house to you but the house isn't there yet so you're buying
the house and land , but you have to wait for the house to be built and method number
10 is simply purchasing land itself without any contract to build a house or built a property
on it.
And a lot of people do go ahead and invest in land obviously lands very likely to be
negative geared, because it's pretty hard to produce an income when you don't have a
dwelling on your block of land but you can get great capital growth with land and it
is a smaller investment than investing in something that has a dwelling built on it
because obviously it's just land, you just going off the land value and not how good
the property is or how nice the kitchen what I've put in is, so a lot of people do go ahead
and invest in land as well.So there you have 10 common real estate investment strategies
depending on you and depending on who you are you may gravitate towards different investment
strategies an investar who just wants to do as a sideline thing and doesn't want to have
a great deal to do with their property might like to invest in buy and hold strategy but
investor who has more time and want to do things quicker and get their hands dirty might
benefit more from a renovation strategy or creating dual occupancies or doing development
because then you can actually create your own equity through hard work . So there is
a lot of different ways that you can invest, I hope that this has given you some food for
thought as to the different methods of investment that there are, I love positive cash flow
as I said it's my favourite, I have a whole course on how you can find positive cash flow
properties and how you can research potential areas that you want to invest in . If something
like that sounds interesting to you then had over to PositiveCashFlowAcademy.com and sign
up there so I go through all these video training tutorials on how to find positive cash flow
properties yourself and how to find out things like parcells, history, how the properties
have been listed for the demographics of the area all this difference stuff that's super
useful if you're going to go ahead and invest.So again that PositiveCashFlowAcademy.com or
if you just want to see the properties that I've listed then again go onproperty.com.au/properties
and you'll see all of those listings over there.So until tomorrow remember your long-term
success is only achieved one day at a time and actually mixing up as well and so you
don't have to say,I am going to invest in a positive cash flow property and that's it.
Or I am going to do it in a buz and hold method.
You can actually say I'm going to start by investing in a renovation project because
I would love to build some equity faster and then maybe if you build equity you might want
to spin it off into something like buy and hold that is less intensive or maybe then
want to scale that up and do development to get even more equity and then profits from
development go to buy and hold, go to negative gearing or go to commercial , it's not one
is the best way to do it, it's about working out what your financial goals are and then
creating strategies that get you towards your financial goals.
But I am not a financial advisor, so I cannot give you financial advice.
, but I can help you make sense of yourselve and your situation as much as possible.