Choosing the right property strategy

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Expert Advice: by Lindy Lear

One of the first decisions to make when you start buying property is which strategy you are going to use to reach your goals. This is critical because without a clear strategy, your journey in property can end up being very risky, a bit hit and miss, and with no formula for success to follow, you may never reach your goals.

How I chose my strategy

When I bought an investment property about 12 years ago with my husband, we had no strategy, we just took advantage of an opportunity. When the property increased in value, we sold it with a little profit and thought we had done well. When I first met Ian Hosking Richards, my mentor, a few years later and told him about this foray into investing, he laughed and said “would you like me to get a gun and shoot you, or would you like to shoot yourself?”  He had bought property in the same area at the same time and had held on to it for the 12 years and it had more than doubled in value. It is one of the star performers in his large portfolio. If only we had kept that first property! The difference was that Ian had a clear strategy when he started and now has a multi- million dollar portfolio.

Finding the right strategy

This first strategy was actually ‘Buy & Sell’. It sounded like a good idea. Ian explained to me that this was more a ‘trading property’ strategy, and that it was costing me a lot to trade. There were the entry costs when buying ( lending, stamp duty and legal costs) and exit costs when selling (real estate agents commission, advertising fees) so  I realised I had made no profit from the sale of my first property at all. That was a big eye opener!

So what I wanted was a strategy to achieve  financial security in the future, but that would be low risk as well. What I learnt from Ian was that a ‘Buy & Hold’ strategy was what I was after. As I wanted to retire in 10 years, I needed to grow my asset base by buying well located, well researched properties in areas that showed strong drivers for capital growth so that my assets (my portfolio of properties) would increase in value over time to give me a passive income.  

Should I buy and renovate, or buy and add a granny flat, or go into developing and hold these for the long term?  What I lacked was time as I was in a busy career.  I had no skills or desire to spend weekends renovating or going to property auctions or open houses. I had no interest or expertise to become a developer or a speculator which all seemed too risky for me. I had little knowledge and needed someone to hold my hand at the beginning so that it needed to be ‘hands off’ investing.

I decided to follow Ian’s ‘Buy & Hold strategy because it was an easy ,hands off, fast track, set and forget formula that suited my situation and my risk profile perfectly. Thank goodness I did meet Ian, and followed his strategy as under his guidance my new portfolio grew quickly to eight properties in 3 years.

Many people do not have the benefit of guidance and may become confused with all the different strategies out there. I suggest that the best way to define your strategy  you is be clear on your goals (short or long term), your timeframe (5 – 10 years or more), and your risk profile (high or low). You also need to consider how ‘hands on’ or ‘hands off’ you want to be based on your available time for research, for looking for property, or for renovating. You need to be realistic. If you have few skills or little expertise, don’t be afraid to ask for help and accept guidance. I found a mentor and it helped to short-cut my journey towards success. Go to the Rocket website if you would like to read more about Ian’s strategy in his new book ‘Rocket Fuel’ as you can receive the first 2 chapters for free. It may shortcut your journey as well.

Lindy Lear is a successful property investor who had a late start into investing, yet has grown her portfolio to eight properties in three years. She is a qualified property advisor and general manager of Rocket Property Group, and she won the Reader’s Choice Award in 2009, 2012 & 2013 for Property Investment Advisor of the Year. Lindy is passionate about helping others realise their goals through investing in property, and can be contacted on 1300 850 038 or visit www.rocketpropertygroup.com.au

To read more Expert Advice articles by Lindy, click here

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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Comments
  • Rocket Property Group says on 31/10/2013 02:12:47 PM

    Lindy Lear will be happy to answer your questions through this forum thread!

  • Roger says on 15/01/2014 12:03:48 PM

    So the expert advice was 'buy Ians book'. Nice.

  • Sukh says on 13/02/2014 06:30:48 PM

    Thanks for sharing your experience Lindy, "Buy & Hold strategy" works great if you hold the property for more than 5 years. You never know when the property/ land prices will go up and you'll make some money.