Tips to a suc­cess­ful port­fo­lio

The Weekend Post - Real Estate - - Front Page - CHRIS GRAY

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.

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