Good strategies and why they have worked

i am a new investor and have been seeking advice off you guys who are more experienced, especially with regards to reading some books to get some good foundations. See 'most people... Who should you listen to' thread. Some really helpful suggestions, which I am hooking into now,

Ej89 suggested we get a thread discussing the different strategies that people use and why they use them and significant details.
Ej said: Many investors who have done well have implemented a mix of things but from a successful investor point of view, it would be nice to see what you guys have learnt and have adopted to be the best strategy.
I see testimonials of strategies people use but I think more details on how to do that and results to expect doing that would be great..

E.g Yardney only buys 10km within cbd because he thinks thats safest.
Birch buys with yield of 6-7%
Rixter buys townhouses/villas with history of 8% growth.

Question is how, where and when though? And what are the different strategies out there?

I think seeing the different strategies will help newer people..issue lately has been every strategy under the sun has worked in Sydney in the last 3 yrs so it confuses people.'

Really good to get ideas from those experienced.

 

What is the specific goal of the strategy in question?
There are different strategies for different goals.

 

HI Seal,

Most of the people I know invest for capital growth to build wealth, and they use rental yield to sustain them in the game along the journey. Only you can determine what you want from investing in property.There are many strategies out there and the ones that you adopt will depend on your goals, financial situation, risk tolerance and timeframe to achieve your desired outcome/s.

The strategies are all out there and well documented in books, youtube ect, - its no secret. In my opinion what new investors need to do is:

1. Determine financial goals and timeframes to target (this can always be adjusted along the way)
2. Write it down in a plan that's simple, yet compelling with enough detail.
3. Read up on various strategies (to be honest there aren't that many, maybe less than 10) and there is more than enough detail documented to decide if it matches your goals etc.
4. Determine what strategies best fit your goals, timeframes, risk tolerance and financial situation
5. Develop a team (Finance broker, accountant, conveyancer etc). Easy to do this.
6. Take action.

That's really what it comes down to mate. Besides strategies, I would also do some reading on state cycles, property clock, property negotiating tactics.

The most successful investors I know personally have done much reading, discussing with like-minded peers and always learning. A lot of study on their own as well. I'm sure there are other approaches as well, this is just from what I have seen personally.

 

Balanced approach works.

 

IMO, most strategies work as long as you happy with returns and result!


Take your pick from:

Reno
GF
Buy n Hold
Land Subdivision
Dual occ
Multi Dwelling
Apartments
H&L packages
OTP Apartments


Choose your budget and take a dive! As @sash said, "Balanced approach works."

 

You can pick an optimal strategy which will work with your circumstances, or, change you circumstances to enable yourself to employ a certain strategy, or, do both.
A flexible strategy is good.

 

Limited to those with a very above average income who can service the neg cashflow while waiting for the CG to occur.

Everyone else; read Margaret Lomas books.

 

Surprisingly Yardney suggests using equity loans to service the shortfall.
I think this is a bit irresponsible particularly in markets like Sydney now. Someone who buys at the top, then relies on capital growth to pay for negative cashflow could be in for a long wait before renewing that equity..

Personally I think strategy should be partly dictated by finance. Like a game - think 2 or 3 moves ahead.
If you can't get your next 2 properties due to lack of equity/deposit, then buy for CG.
If you can't get your next 2 due to lack of serviceability, then buy for cashflow.

 

Great point Dan. Am also a newbie and planning to venture out very soon hopefully. Currently reading books (thanks to Rixter for his recos) and spending some time of the day going through the posts in the forum.

With the recent APRA tightening in the lending market, do we need to opt for latter (cashflow) than the former (CG) for coming years?

 

Whatever works is what goes

 

Possibly, but if it's your first IP then almost always it's going to be equity you want. Unless you have your own home with lots of equity.

Also the 2 major CG cities have already moved to the top.

Other cities do get CG too, but a lower rate.
I think there will be alot of people buying properties that have moderate growth but also moderate cashflow too, just because of the stage of the various cycles at the moment

 

Been thinking the same thing myself - got a deposit saved and looking to get into an IP as like a lot of people of my generation, I can't afford a PPOR within striking distance of my place of work.

I've read Yardney, Pete Wargeant, Lomas and currently reading Jan Somers. Yardney's strategy was superficially appealing, but I can't help but think that at the moment it is predicated on low interest rates. I'm on a pretty modest income, and don't have any other equity to draw on, so basically any interest rate rises would knock me out of the game before I've begun as I wouldn't be able to cover the rental shortfall. As such, I am probably going to start with a CF + property and then save the excess in order to buy a second property in 12-18 months.

 

Would anyone care to give an example of how they crystalise their thoughts?
Do you have a roadmap physically written out defining goals and the approach/strategies you will use along the way? A goal in mind and a general approach without anything committed to paper?

 

The renovating book by Jane Slack-Smith is the strategy that resonates the most for me.

We always look for something that we can add immediate value to with a bit ofhard work. Providing you get the fundamentals right this will give you some immediate gains in both equity and yield.

Dual occupancy potential is also part of what of what we do.

 

I know a lot of investors try to buy BMV and personally i think its important.

But i know a girl whose only strategy is to focus on buying BMV through door knocking, researching, tough negotiating and she's done really well for herself over the last 8 years or so.

 

As mentioned they all work if executed right.

Personally I prefer retain reno and build.... Higher security imo

 

Like sash says a balanced approach, the CG will help you get the deposit for the next purchase/s however if you run out of cashflow then you will need to acquire a CF+ property or wait sometime for the CF- to become +.

I personally would be looking for the CG as a first property as it will put you in good stead to acquire another property.

Also look if you can purchase something where you can add value (reno, subdivide, develop) as you can always do something with it later. E.g. If you find a house where you can battle axe you may choose to now or maybe 10 years in the future put another house on the block which would then increase the yield of the property.

 

All the above
J

Yes they all work, and easier to make money in rising market

 

Good one.

Also, the - Whatever it Takes, strategy.
If you do whatever it takes to get the job done, the results you need, etc, you can not fail !