Investment Property Strategy - A Definitive List

Investment Property Strategies - A Definitive List

Hi,

I'm new to the forum and have been sponging up as much information as I can, and found a few comments hitting home especially one by one of the senior members about how many focus on the IP itself instead of their strategy, with the IP being akin to the vehicle and the strategy being the driving force behind it.

I wondered if I was aware of all strategies, so I listed them out and thought others may benefit. I found many threads mentioning them but not one definitive list. If there is one that I've overlooked I'm happy to delete this post. Please feel free to correct or add any additional ones I haven?t listed:

1 - buy and hold (long term): purchase a property with the goal of holding long term

2 - short term capital growth: purchase a property with the goal of achieving short term capital growth before selling or re-valuing property

3a - renovate and sell: purchase a property with the goal of increasing its value by -renovating it before selling

3b - renovate and hold: purchase a property with the goal of increasing its value to then hold

4a - property development: typically involves levelling an existing building, or beginning on fresh land, and building an entire new building from scratch

4b - sub-divisons: is the act of dividing land into pieces to sell or otherwise develop.

- Managed Super Funds (MSFs): involves trusting a financial institution to invest your money in property shares and portfolios

- defence housing: purchase a property to then engage in a unique leasing arrangement typically varying from 3 to 12 years

- National Rental Affordability Scheme (NRAS): a commonwealth or state scheme that offers annual incentives per dwelling per year typically for ten years

- holiday home: purchase a property with the view to use as a holiday home but also rent out

- co-investment with family &/or friends: when multiple parties band together to purchase a property

- flips: purchasing and selling a property before the original purchase has been settled

- wraps: purchasing a property and paying instalments to the seller instead of taking out a loan

- purchase / lease options: is an agreement between 2 parties that entitles the purchaser the right to take up the option to purchase the property (or land), typically at a fixed price, from the other party during a specified time period. For this right the buyer is typically charged an option premium.

- Listed Property Trusts (LPTs): provides investors with access to property and property related securities listed primarily on the Australian Stock Exchange. These trusts invest in REIQ and listed property securities whose dominant business is property ownership, property funds management or property development. Unit trusts of property assets which are not listed on a stock exchange are known as unlisted property trusts (UPTs).

- Joint Venture Agreements (JVAs): is like a partnership that is entered into for a specific investment goal or purpose. It comprises of a money partner (investor) and a Vendor Financier (Co-Venturer). They range from simple projects (rental property) to more complex (purchase for development and sale), essentially based on profit share (profit split) rather than fee or commission based.

- Syndicates / crowdfunding: is the practice of funding a property's purchase by raising the funds typically from a large number of people, typically via the internet.


I haven't listed home ownership (eg. PPoR) as a strategy.
 
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Still lots more. NRAS springs to mind.

Broadly you con purchase for CG or cashflow or a combination. But essentially those two are what lead to profits.
 
Holiday homes which get rented out - often times red up being used by the owners during peak rental periods - summer hols, Easter hols, etc - so not much of a (cashflow) strategy there.
 
Still lots more. NRAS springs to mind.

Broadly you con purchase for CG or cashflow or a combination. But essentially those two are what lead to profits.

Understood. I'm just writing the strategies but understand almost everyone's strategy would involve a combination.

I have added NRAS JP. If you want me to add more just let me know.
 
Holiday homes which get rented out - often times red up being used by the owners during peak rental periods - summer hols, Easter hols, etc - so not much of a (cashflow) strategy there.

At this stage I'm just documenting the strategies, not really comparing, but yes I agree.
 
Not sure why there needs to be a list. Most of those are investment products rather than strategies.

Some purchases may have a combination of 3-4 of those attributes and some will change while being held. So it's fairly fruitless

You're better off just making money.
 
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I don't know what category serviced apartments, student accommodation, retirement homes and parking spaces come under, but I think this is a area you've missed. I suppose you could call them "managed property / investments", unless there's an official term for them.
 
Not sure why there needs to be a list. Most of those are investment products rather than strategies.

Some purchases may have a combination of 3-4 of those attributes and some will change while being held. So it's fairly fruitless

You're better off just making money.

Hi DT. A lot of new members get asked what their strategy is, including me so thought it may be on benefit. To help me understand, if I asked you what your strategy is, how would you respond?
 
I don't know what category serviced apartments, student accommodation, retirement homes and parking spaces come under, but I think this is a area you've missed. I suppose you could call them "managed property / investments", unless there's an official term for them.

As DT said do you think these are products or strategies Jerry?

PS - congrats on your recent purchase.
 
The newest strategy to be born with the way values are increasing and pricing people out of the market is, Crowdfunding. It will be the way of future investment.
 
1. Purchase Options
2. Lease Options (rent to buy)

The newest strategy to be born with the way values are increasing and pricing people out of the market is, Crowdfunding. It will be the way of future investment.

Hi Rixter. I've added these.

Humbling to have your input. I've read many of your posts and my comment about a senior member was you (car/driving analogy). I'm currently getting my head around your preferred strategy/products at the moment - eg. townhouses in surrounding Brisbane satellite cells.
 
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i understand DT's argument but to start off its good to have a reference list in one place. Then understand each them, then say (eg) im not touching the bottom half of that list, or i'll use whats best for me

Can we have numbers next to each as the main ones roll into the next. Id go:
1 buy and hold (long term)
4 renovate and hold:
2 short term capital growth
5 property development

Or just a straight up:
1 buy and hold (long term)
2 short term capital growth

At this stage I wouldnt touch the rest, but handy to know what they are
 
i understand DT's argument but to start off its good to have a reference list in one place. Then understand each them, then say (eg) im not touching the bottom half of that list, or i'll use whats best for me

Can we have numbers next to each as the main ones roll into the next. Id go:
1 buy and hold (long term)
4 renovate and hold:
2 short term capital growth
5 property development

Or just a straight up:
1 buy and hold (long term)
2 short term capital growth

At this stage I wouldnt touch the rest, but handy to know what they are

Hi Bob. Sure, I can do that. I've re-ordered a few so they're in groups (eg. 2a, 2b), with what I expect to be the most popular towards the top.

Happy to re-order/re-group them if people have suggestions.
 
OP,

Is it worth splitting 1. into a) buy and hold (capital gains) and b) buy and hold (cashflow)?

The former often involves utilising negative gearing in the early years usually becoming CF positive later whereas the latter seeks to maximise CF in the first instance, with any CG being an added bonus.
 
This is a great list and thank you for coming onto the forum with humility and useful information combined. :)
As mentioned above, most people would class 'strategy' as being cash-flow positive vs negative gearing. Some might like to buy regional, others on the outskirts of a city, others go inner-city or bust. Someone might have a strategy combining all of these and more.
While it's good to clarify goals, they should never be set in stone, should they? We all have to live with the changes and circumstances that life throws at us. Sometimes we try something and find we don't like it. We have to be able to change our minds.
That question: "What's your strategy?" has several uses:
1/ to find out what kind of purchase you're interested in - e.g. cashflow or 'blue chip' etc.
2/ to intimidate
3/ to imply that you need to see a professional and you can't do this on your own or learn as you go.

This site is meant for investors to discuss and help each other. Firstly, I would ascertain:
1/whether or not you need the rent to pay the mortgage (up to 7 or 8% interest rates) in which case I'd look at something cosmetically challenged outside any capital city other than Sydney (or Perth or Darwin). You could go regional maybe - if you had a good reason; or
2/whether you have a secure and high-paying job and can afford to get something really cool which will grow like crazy whenever there's a boom. (By the way, everything grows like crazy whenever there's a boom.)

All the best,
Wattle
 
Hi DT. A lot of new members get asked what their strategy is, including me so thought it may be on benefit. To help me understand, if I asked you what your strategy is, how would you respond?

I agree with most above what you have mentioned are products.
Strategy is a plan of how you wish to achieve wealth?
What net worth do you wish to have or what $ income? What year do you wish to achieve it by?
Then how are you going to do it? Will you be buying IPs for 'buy and hold' each year, or when you can afford. Will they be for CG or CF? Where will you buy them, what type, etc...
I could go on and on and on and on....
Strategy is your plan how to build wealth.
The ideas you mention may help you get there but I certainly do not use ALL of them. I think it may be better to specialise in few rather than generalise in ALL, wouldn't you agree?
Read some of the strategies of past SS that they have used!
 
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