Tips to a successful portfolio
advice I would give to anyone looking to grow a portfolio is to develop your strategy.
Everyone is different and will prefer a different investment strategy depending on their knowledge, attitude to risk and level of involvement. It’s important to be realistic. Don’t aim to buy five to 10 propert i e s tomorrow and become a millionaire overnight.
Concentrate on taking simple steps at the start and buying one property at a time.
Straighten out your finances and work out how much spending money you have and what you want to achieve – for example long term capital growth or rental yields?
Remember to be selective about the properties you choose to invest in for your portfolio.
Your main focus should be on buying safe, solid assets that will go up in value if you hold on to them for 10, 20, or 30 years.
Consider diversifying your property portfolio through investing in smaller value properties in different geographical areas.
This will ensure that where some properties may be falling in value, others are rising.
I f you are a high income earner who wants to create passive wealth quickly while reducing your risk, I believe you should look for the following key aspects in potential investment properties. Properties within the median price Buy properties that are within 10- 20 per cent of the median price for that area as that means 80 per cent of the population can afford to rent them.
You want properties that are going to be easy to rent because as a property investor, that’s what pays your mortgage. Properties close to major cities Try to buy properties 5–15km from major cities as they are close to transport, leisure and work.
CBD areas have no height restrictions so technically there is no limit to supply, whereas suburbs usually have height restrictions.
Buying unique properties in good locations help ensure to that you will be able get a tenant, and a high valuation, making it easier for you to buy further properties. Both new and old properties A great portfolio will have a mix of new, off-the-plan properties to g e t g rowth with a small deposit, and older properties that can be renovated to add immediate value.
The most important thing to look for is properties that are set to grow in value because that’s what creates wealth.
Ensure your property is in a proven area of capital growth and is likely to grow steadily for years to come. Properties in a smaller block Properties that are in smaller blocks are unique since there’s usually less available for rent at any one time.
Big blocks have big strata levies with extra maintenance expenses such as lifts, pools and gyms which often don’t give you any more rent or capital growth.
As soon as someone else more de sperate t h a n you knocks down the rent or reduces their sale price for a quick sale, every other property on the block gets devalued. Properties with two or more bedrooms A property with at least two bedrooms is more attractive to well paid professionals who may rent them. Not many professionals will share with three under the same roof.
Also often it’s easier to get two people each paying rent for a two-bedroom place, than it is to get one person paying for a one-bedroom unit or studio.