A low risk approach to property investing

Expert Advice with Ian Hosking Richards. 21/11/2017

One of the problems with property is that performance is not always predictable with any degree of accuracy, particularly in the short term. So what practical measures can we take to improve our chances of success?

I must admit that during my earlier years of investing I did not take a lot of notice of what the top property commentators were saying, both for my own purchases or recommendations. However, over time I soon noticed that even the most respected property professionals occasionally got it wrong, particularly when it came to where to buy. Now with 100% hindsight, I can look back and compare what was predicted for certain markets to how they have actually performed. And it really is a mixed bag, to put it politely.

If we cannot completely rely on so-called ‘property experts’ to tell us where to buy, how do we make the property investing process less daunting?

Geographical Diversification
Over the years, I have invested in a number of cities, regional centres and states. Individual assets have not always performed entirely to my expectation in the short term, whilst others have exceeded my expectations. However, despite the fact that at any given point in time, not all of my assets are in a robust growth phase, my collective asset base has increased in value year on year, and as a portfolio has performed well. The more properties you own and the more geographically spread your assets are, the less you will be affected by the performance of the individual properties in your portfolio.

Target major population centres
In the past few years, some of my best investments have been in Sydney, Brisbane and Melbourne. This really comes as no surprise to me, as I have observed over the years that the largest population centres with the most diverse economies tend to show the least volatility. Whilst I’m still happy to invest in major regional centres like the Sunshine Coast and Geelong, having exposure to the Eastern Seaboard capital cities has really helped to stabilise my portfolio in uncertain times.

Summary
I believe that it is essential for beginner investors to be able to tap into the knowledge base of much more experienced investors in order to make a really good start in investing. This is certainly how I got started. However, even expert investors do not have a crystal ball to predict the future with 100% accuracy, and it is important to acknowledge this.

Gaining exposure over time to at least two major capital cities should give you a strong base to your portfolio. And be prepared to take a long-term view. Over the shorter term of 3-4 years, properties do not always show strong performance, but generally speaking the longer you hold them, the more they should get pulled back to a decent long-term average, as long as the underlying fundamentals are strong. A large and diverse portfolio is best way to avoid the vagaries of the individual markets, and it also the best way to reach your long term financial goals.

So, go out there and start buying, today!

..........................................................

Ian Hosking Richards is a successful property investor with a portfolio of over 30 properties. He is the CEO and founder of Rocket Property Group, a leading independent real estate agency that helps hundreds of people each year enter the property market or grow their existing portfolios. 
For further information or assistance, please visit www.rocketpropertygroup.com.au or call 1300 850 038.


To read more articles by Ian Hosking Richards, click here

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

Top Suburbs : mt colah , new farm , bligh park , berala , mt lawley

SHARE