Property and tweaking your strategy

Times are a changing and smart investors will always work out ways to keep investing, but I think its probably going to require more tweaking to do this today as finance is tightening.

What will you do to tweak your strategy so you can continue investing?

My strategy is very simple and that is to continue to increasing cash flow and capital by adding value/developing, buying property resi/commercial and flipping for short term gains and hold higher yield properties. Will also keep chasing rising markets, dead markets....be gone



MTR

 

Sit indoors and wait for the storm to pass.

 

I don't think this is the normal psyche of an investor? Perhaps I am wrong??? I have read enough posts on PC to realise that investors just want to buy even when market conditions are wrong, they always see a pot of gold at the end of the rainbow.

 

Less aggressive property accumulation due to the change in the lending criteria. Explored and acted on reducing my personal expenses.

More into cash flow and 'defensive strategies' to keep the current properties. Maximise the current IPs with gradual rental increases over time, renovations, granny flat conversions and a bigger buffer. I think if anyone is going to purchase another IP (not their first or even third property) need to consider some IPs that are going to be generate a good cashflow/ return to balance the book.

I believe that more seasoned property investors are now getting more into shares to diversify their investments, which is not a bad thing at all. I've personally been active in the sharemarket of late but now will let time do the work now.

 

No "strategy" should be set in stone.

Thankfully we did all our investing before we even heard of this term. We simply bought when we could, and chose the best option at the time.

Our only belief, if any, was that the more money and assets we had when we retired the better.

Worked for us.
Marg

 

That's good.
Your strategy was to buy property when you could afford to buy.

Servicing debt just got a tad harder today

 

A marketing term gone viral.

 

+1

 

Good strategy. Mine is select assets based on the competition for those assets, be willing to sell, and watch sentiment very closely.

 

Still rolling with the "buy a PPOR, pay a chunk off....buy a new PPOR and rent old one out". Rinse and repeat..hopefully about 5 times?

I'm a newbie but this slow and stupid strategy appears to look even better with all the new financing shenanigans going on.

Will keep reading and learning though....if I find a better strategy that works with our low risk appetite will change for sure.

May the best idea win.

 

Tweaking is a good strategy. We are/have tweaked a little to better our cashflow scenario. Selling off the worst performers, 1 down and 1 to come shortly so hardly that much debt.
We have been rentvesting for the last few years but now want our own place again. Looking to add value through a renovation if possible if we buy this place we are interested in, also interest rates are about 1% cheaper over investment rates so we have freed up cash there.
Now with 1 sale and another on it's way I need to work out were to put 300k. I could buy more shares and get around 6-7% return through dividends, or place it in the offset at 3.7%. Im undecided on this, 3% on 300k is 9k a year better off but unsure so far. I might look into the vanguard wholesale fund.
So overall we have reduced debt from poor performing assets. Trying to increase equity buy adding value(might not work but happy to try), and increase returns buying dividends shares.

 

Way easier and far cheaper than when we did most of our investing in the 1980s and 1990s. Interest rates and LVRs today that we would never have dreamed of.
Marg

 

I think you're right.
I'm in the process of getting refinanced.
Spooked by the new lending criteria and risk.

I'm more conservative than I thought I was.

In the process of minimising risk and enhancing cash flow

I'm somewhere between accumulation and consolidation phase

 

As a young investor this is my first boom and first 'down turn'

I don't want to be caught out with my pants down when the tide goes out...

 

At the start of the year we sat down and drew up some plans based on our current situation on one income as my partner is on maternity leave.

We have got our budget under control so we then moved onto debt recycling through a share portfolio to make our PPOR debt into tax effective debt which allows us to diversify into another investment stream whilst maximising tax breaks. Shares are performing well at this early stage.

Letting our Investment Property tick along at the moment with a recent rental increase improving our yield over 7% & this particular market showing signs of good capital growth over the next 24 months.

Within 9-18 months time we believe we will have enough equity to pull from our PPOR and purchase a well located IP.

My partner is now considering not returning to work but studying in the view of finding a better work life balance job that will also improve our income in 2-3 years times for the long haul.

Cheers,

 

In 2008? bank policy changed and low doc/no doc loans were pretty much gone overnight. I think APRA is a walk in the park in comparison to this....crippled many investors

My point is how will investors tweak their strategy with what is happening today interest rates rising, bank policy changing, much harder to service debt. If you cant service debt you cant move forward. Some may just sit on their hands and wait ??? Not such a bad thing especially if markets start to turn??

 

First thing to understand is this is part of the cycle. Eventually credit crunch will ease and bank will start lending money (cause that's the major way they make money)

When that will happen...god knows. I will start paying down my loans (incl. investment loans) and simultaneously build my share portfolio using core satelite approach as much as i can. And by the time credit crunch finishes i'll be ready to buy due to decreased debt. Also, invest in myself to get more income which helps qualify for loan and upgrade our ppor....meanwhile if market drops (I hardly think that will happen)....buy the ppor counter cyclically....

 

Sounds like a good plan

I agree that it is part of the cycle and credit crunch will ease and life goes on. As I mentioned during in 2008 banks abolished lo doc/no doc overnight, this had massive impact on investors and property markets Australia wide.

However, as part of the cycle I believe Melb/Syd will drop back, after boom comes bust, history proves this, time and time again. I know many think these capital cities are bullet proof, but both have also experienced downturns. Property markets work in cycles.