Strategy Thread - Sticky

Hi All,

Not sure whether there is one already - but I was thinking with the number of people who drop by and ask questions around strategy - that it would be a good idea to have a sticky thread which outlined some of the basics around developing a strategy, and some of the considerations that one might work through.

Then when someone asks - how do I develop a strategy, or where should I buy, they can be directed to this thread which would take them through it step by step.

Thoughts?

Matto.
 
Hi Peter,

Thanks for the response.

Agreed - it is a VERY difficult topic to summarise into one thread.


I was more thinking that it could be something along the lines of,

Key considerations for developing your strategy

Followed by some questions/areas for consideration

What is your end goal.
What is your end game.

What investing type are you comfortable with (CG/CF)
How active do you want to be within your

These questions/sections could then have links to threads/posts/links which contain good information relating to these key components.

Oh well - just thoughts......
 
Apologies in advance for topic

I am in the process of coming up with an IP strategy for us to reach our goal - definately the hard part.

Owing possibly millions does not bother me

but

What happens if me or my husband die in our accumulation stage?

If a property is in his name and he dies does the property and its loan automatically get transfered to me OR do I need to get my own loan to be able to keep the property?

Is this one of the situations where you can become financially worse off?

Or is this where you take out a massive life insurance policy?
 
CHAOS a few things to consider...

If something happens to your husband, will you be able to service the loans even if they are transfered into your name? Will your strategy be derailed? Life insurance can mitigate this.

Even more importantly, what happens if your partner can't work any more, requiring your constant care? Income protection insurance covers this problem.

You might also want to consider protecting yourself. Can your husband take care of your family and continue to work?

Part of any investment strategy should be to ensure that if something bad happens, your investment strategy isn't total destroyed.
 
CHAOS - Your retail super fund (if you have one) may already provide you with both income and life insurance. Best to chase this up. If they don't you can find an insurance policy yourself and pay the premiums from your super account. If you don't want your super to reduce you could salary sacrifice the premium amount into your super thus saving some PAYG tax.
 
thanks grantwhit

If your super company pays your life / income insurance then do they take a % of that cover - rather than a lump sum fee pa - if you paid it yourself?
 
there is premium charged by the super fund to provide u with cover. You would need to check what your fund covers and what fees are charged as well. I changed to an industry fund and sourced my own insurances from another company not affiliated with the industry fund as it was the cheapest way to go. You should also chase up any lost super u have. The ato have a service i think that can find it (the free online ones are rubbish). I think if an old super fund gets to $200 (from fees chewing it up and no contributions being made) it gets transferred to some ato fund and sits there. A guy i work with chased up all his old super and found he had 3 life insurance policies in 3 different funds....paying around 500pa for each when u only need one!
 
This is exactly what I was looking for this morning.
Been trying to come up with my own strategy, but not sure what others are doing and what is possible.

The interviews of different members were quite helpful. It gave an idea of what some of the forum members are doing. But it doesn't go much into specifics, which are probably over my head at this stage anyway.

From someone just starting to think about formulating a strategy, a thread like that would be very useful in my opinion.

PT_Bears thread is very helpful too.
 
Got the latets API, and Mr Yardneys contribution really struck a chord - and I thought it was quite relevant to this thread.

Key Takeouts from my perspective (pg 146 of API November 2012).

Ensure you have a formulated property investment strategy, and
Regularly review the portfolios performance.

Obvious questions - how much do you want your portfolio to produce? How many props will you need to achieve this?

What type of strategy can you envisage (will you follow) - CG, CF or leave it up to luck?

Four pillared approach
- Buy below intrinsic Value
- Buy in area with long history of capital growth
- Property with a twist
- Property where can manufacture growth.

Thanks Mr Yardney.
 
Not a big fan of mr Yardney, e advocates buying negativelygeared property because 'positive cash flow property NEVER goes up in value- so buy off the plan!' Or something like that. Buy in area with long history of capital growth.. I would say indicators of future capital growth are more relevant- Reminds me of one of warren buffett's jokes:
Client: thanks for recommending xyz stock! It's gone from $2 to $2.40 in the last month!
Broker: and it's an even better buy at $2.40 than it was at $2!
Client: Damn, I knew I should have waited!
 
Last edited:
For me, strategy means working out how you plan to make money out of real estate. Implicit in that is identifying the risks and ways of mitigating them.

People often forget to do the risk analysis: most have no idea what a risk analysis is.

So the basic plan might be: buy a house, hold, sell for profit.
Risks are: house might not rise in value enough to make a decent profit; or I'll not be able to afford to hold the property long enough to enjoy the rise in value.
Mitigation: minimise buy price; minimise holding costs; buy house in area that has good growth prospects.

An item like "minimise holding costs" covers an ENORMOUS range of things, like house maintenance, rental yield, and so on. Most of these are in the investor's direct control: buy a low-maintenance house or renovate to lower the maintenance. IMHO this would include NOT buying into a block of apartments with pool, gym, lifts etc that will cause strata fees to spiral upwards.

If you work through and flesh everything out you end up with a large list of considerations, most of which can be mitigated quite easily because they are under the investor's direct control -- often coming down to simple choice of property, and that's what the "due diligence" is that people talk about, the checking of all the risks.

Of course, the item "buy in an an area with good growth prospects" is a tricky one: if honest analysis is given to it then you'll realise that this is the BIG UNKNOWN. Mitigating this risk really means making a strategy that does not rely solely on capital growth based on movement of the market, which is out of the investor's control. So strategies like renovation and improvement come into play to mitigate the risk that the market won't move in the right direction of its own accord.
 
Back
Top