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What are the ingredients to a good property Portfolio?

Discussion in 'General Property Chat' started by Inov8ive, 16th Aug, 2015.

  1. Inov8ive

    Inov8ive Well-Known Member

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    I am interested to hear from people about the general types of properties and locations that everyone considers to make up a good portfolio. i.e Is it a mixture of regional and metro with a sprinkling of coastal. Is it intelligent to have a commercial property in the mix? Maybe an international property for more diversification? Personally I only buy blue chip but am thinking about adding some CF in order to help to maintain the portfolio to minimise risk.
     
  2. FireDragon

    FireDragon Well-Known Member

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    This probably depends on individual's financial situation, goal and risk tolerance. I only buy in capital cities but it's only because I am not familiar with regional areas. I am sure it can also do well if you are familiar with regional areas.

    My portfolio contains units, apartments, villas and a commercial property with development potential. I believe a good portfolio should also contain houses to have better capital growth, but since I have a high growth commercial site I have decided to buy units and villas to have better cash flow.

    Edit: International properties - I will definitely look at international properties when time permits. Some of my relatives in overseas bought properties 10-12 years ago and the price has increased five times. However, it involves exchange rate risks and needs more time to do the due diligence.
     
    Last edited: 16th Aug, 2015
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  3. Leo2413

    Leo2413 Well-Known Member Premium Member

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    In my opinion a good portfolio is one that:
    1. Meets the investor's goals,risk profile and financial situation.
    2. Is sustainable from acceptable cash flows whilst;
    3. at the the same time having properties with high growth potential for the short, medium and long terms.
    4. Diversified across across Australia's major cities
    5. Has potential to add value
    6. Has exit strategies for each property
     
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  4. Inov8ive

    Inov8ive Well-Known Member

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    I really like points 5 & 6. I always consider these for each purchase as well!
     
  5. Inov8ive

    Inov8ive Well-Known Member

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    What countries would you focus on for an international investment out of curiosity? I still kick myself a bit at some of the deals that could of been had in the States after the GFC. Came close a few times but backed out. Wouldn't touch it now though.
     
  6. FireDragon

    FireDragon Well-Known Member

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    I will focus on Hong Kong and London as I have relatives in these countries.
     
  7. Hodor

    Hodor Well-Known Member

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    There are many ways to make a "good portfolio". I believe the simplest way is to buy consistent in capital cities and then holding on for a cycle or two
     
  8. Inov8ive

    Inov8ive Well-Known Member

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    Thanks Hodor, that's exactly what my mantra is as well, and it has served me very well. Although my concern is CF. I have solid equity but am thinking that that my next purchase needs to be CF+. Need to look for something with development potential I think because I just refuse to buy anything that doesn't have good CG prospects.
     
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  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Me too. It makes no sense. Especially if your wanting to create wealth.

    I also refuse to buy anything that I can't add value to.
     
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Commercial, industrial, retail and infrastructure
     
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    Commercial, industrial, retail and infrastructure
     
  12. MTR

    MTR Well-Known Member Premium Member

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    For me its a great portfolio if you can continually generate income/growth. I don't care where/what it is as long as it makes sense.

    I would like to eventually add CIP/Industrial properties as long term hold to the mix.

    This is the mix -
    cash flow positive properties (holding for income)
    properties that I can flip short term
    properties for growth short term
    properties I can develop (income/holds)

    BTW, love your avatar, "awkward" :)
     
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  13. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Whatever works for you.
    Leo's list above is pretty good though.

    We've only got a duplex in Sydney and two small lots of townhouses in Brisbane very close to each other.

    Now considering to add a commercial, but not sure we need to because we could LOR on 300k+ passive income in the next 2 years from current holdings.

    I'd rate the ability to accumulate at a fast pace to be more important than quality of portfolio, althought you can have both.
    You got to be in the game to make the gains and time does the rest.
     
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  14. Scott No Mates

    Scott No Mates Well-Known Member

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    Most toys vs the shiniest toys?.
     
  15. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Not really referring to buying low quality cheapies, but rather the ability to accumulate quality properties in general.

    A reasonable increase in income could allow one person to control double the size portfolio over another person on average income for example.
    A big increase in income can make a huge difference in accumulation speed.

    There are limits you can do in property to make the values and returns grow faster with your current holdings, but increasing your income outside of property is unlimited.
     
  16. Inov8ive

    Inov8ive Well-Known Member

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    I like your mix. Its always much more fun buying flippers and developers than it is waiting for buy holds to perform.
    Re: My Avatar, thanks I think
     
  17. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I think I know what your saying @Ace in the Hole ..but personally I believe income is limited while profits are not. I think its much easier to increase profits/income in property than it is in outside employment. Unless you are referring to businesses? In which case I agree, having a great business can have amazing returns. Though I do see property investing/deals as a business too.
     
  18. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Everybody is their own business and salesperson.
    Everybody is exchanging a product or service to earn money, even employees.
    Most employees are hopeless sales people and simply take what is offered to them, rather than it being the other way around.

    The ones who make themselves more valuable to the marketplace, or sell themselves better are the ones who earn more money, there's no cap on what one can earn.
     
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  19. York

    York Finance Broker Business Member

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    Excellent.
     
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  20. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I agree with that. Do you think its generally easier then to make more income/profits in property investing than it is as an employee, generally speaking?