10 Common Real Estate Investment Strategies (Ep138)
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10 Common Real Estate Investment Strategies (Ep138)


Investing in property can be a great way to
achieve financial freedom or to put a little bit of extra money into your pocket but when
it comes to investing in property there are a lot of different strategies you can use
to achieve success.Now not one particular strategy is the way to go ,you can achieve
success through all of these strategies.So today I want to highlight 10 of the common
real estate investment strategies that you can consider when it comes to deciding how
you want to invest in property .Hi I’m Ryan from onproperty.com.au your daily dose of
property education and inspiration.Every single day I released a new educational video podcast
and article as well as a new positive cash flow property for sale which I have found
for you and listed on the website , so you don’t need to go trawling the Internet on
real estate.com.au for the next 7 hours to try and find a property just head over onproperty.com.au/138
to see today’s property and that is a property that is listed $265,000 and it is on the Gold
Coast where I live .So it’s not in some regional centre which one of them are both on the Gold
Coast and is currently estimate to rent for $430 per week, so that’s an 8.44% rental yield
so that’s pretty exciting .So again you can find that at onproperty.com.au/138or if you’re
listening to this in the future are all that properly done is doesn’t sound perfectly you
can see our full list of properties by going to onproperty.com.au/properties.So that something
I’m doing a April testing out if a lot of people find this valuable find this interesting
then I’ll go ahead and keep doing it.Sso that something that you like go-ahead check it
out .So 10 common real estate investment strategies.Wwhat are they what are the benefits of each individual
strategy and what sort of person do you need to be to go about investing using these particular
method. So method number one is your buy and hold
strategy.So this is a pretty common strategy I would be , I can’t say specifically because
I don’t have the data on it , but I would say that this is the number one investment
strategy used in Australia and basically all it is, is purchasing a property in order to
hold that property for the long term .You may be purchasing the property for rental
income or you may be purchasing a property for capital growth that doesn’t really matter,
it’s still going to be called buy hold ,if you’re buying it and holding it for a long
period of time .So this is extremely common because as I say property tends to double
every 7 to 10 years so you can get a great capital growth out of it and also rental incomes
tend to go up over the years as well which means overtime you keep getting more and more
rental income from the property and someone else can pay for your mortgage for you if
it turns into a positive cash flow property so buy a whole is extremely common it’s a
pretty simple way to go as well because you don’t have to know a great deal about how
to renovate or how to do **options** or how to do all these funny things which is pretty
basic, you buy hot property ,you’re holder, you are selling in the future ,you keep it
for the rental income. Matter number two is renovation and that is
purchasing a property in order to spruce itup put in some TLC some tender loving care and
improve the value all the rental income of that property through renovation .Now this
can be as simple as doing a cosmetic renovation we go in and you put in a new carpet and you
paint the walls and put a new front door and simple stuff or it can be as extreme as changing
the layout by removing walls or moving walls and adding extensions to the property so renovation
is a common strategy used by a lot of investors and all other times it will be to purchase
a property renovated it and then flip it or on sell it as quickly as possible to make
a chunky profit and then move on and do another renovation as well So this can be a very profitable
strategy but obviously it involves some good old **elbow grace** ,get in there and doing
some work even if you’re contracting out you still need to manage the project and so technically
it still work though maybe I wouldn’t classify it as **elbow grace**. All right, method number
three is dual occupancy. Now I sat down with Rachelle and Nicol who are town planner here
on the Gold Coast which is where I live .Best place I just moved here six months ago. It’s
awsome, I love it, but I sat down with them and we talked about dual occupancy and how
to create a dual occupancy .You can check that out by going on property.com.au/134 the
episode 134 if that is something that you are interested in . Now dual occupancy is
creating two or more rental incomes from one property ,so it’s two or more dwellings from
one title, I guess would be more specific so that may be by adding a house or adding a granny flat onto
the back of your property or it could mean simply slimming your property so downstairs
is one self-contained living area and upstairs is a second self-contained living area or
the front is self-contained and the back is self-contained, you get the idea, basically
you’re getting multiple rental incomes on one title and so that’s dual occupancy and
that can be very profitable investment strategy in terms of rental income and can actually
help when you come to sell your property as well because the one house can have multiple
uses or generated income for the people buying it.
Method number four is subdivision and so this is where you take a property or a block of
land and you draw a line down the middle and you turn it into two separate titles.So this
means that one blog can now be sold off or can now be developed on and other block stands
on its own as well so that effectively you’re taking one title and you’re turning it into
two titles with smaller blogs of land. Subdivision is an expensive process to go through,I’ll
have to do an interview to find out the full cost for you and I’ll go back to Rachelle
and Nicol from peertheurbanplanning.com.edu and they’ll tell me how much it costs to do
subdivision. I think it’s around the ballpark figure of about $30,000 or more to get a subdivision
done but obviously if it’s going to be profitable then if you’re spending 30,000 and you’re
going to make another 30,000 or more probably worthwhile thinking about it. Method number five common real estate investment
strategies is development and that’s really taking subdivision to the next level .So rather
than just subdividing you might take a block of land and build townhouses or villas or
units and then go ahead and** strittle title** those.So basically rather than just renovating
property rather than just drawing that line in the sand to subdivide you’re going ahead
and you’re building multiple dwellings on you know what is one block of land or could
be multiple if you subdivide, but basically you’re going ahead and you are doing a larger
scale developments and that’s extremely common among investors especially as you tend to
get on in your investment journey once you earn two or three or more investment properties
it can be extremely looking lucrative to do these developments but then often you need
a larger cash outlay in order to get them going.So if the newbie investors, they are
kind of a bit out of reach, you can’t really get to them, but the people who have done
a few properties successfully in the past seems to be a natural progression into development
a lot of those investors. Number six is positive cash flow properties
and now this is I guess a spin on buying halt because technically positive cash flow properties
you’re still buying and holding them but you’re buying them specifically for the positive
cash flow that they spin off.So this could be the positive cash flow from day one or
it could be the positive cash flow that allows you to pay off a mortgage so the property
is purchased for you. But basically positive cash flow property is property that generates
more in rental income and you are paying in expenses and that leaves some passive income
leftover that you can spend on whatever it is you want to spend it on.You could give
it to your favourite charity or your church you could use it to reinvest you could use
it to pay off the mortgage you ccould use it to pay for your lifestyle and a lot of
investors will either go about investing using positive cash flow property to achieve financial
freedom or they’ll invest using method number seven which were about talk about ,negative
gearing and then in the future when I’ve got no equity growth and they’ll sell off some
properties and turn the remaining properties into positive cash flow properties for that
rental income. So positive cash flow properties are the probably the method that I love the
most because I just love that idea of passive income coming in that you don’t really have
to work for and passive income that can actually grow over time as rents increase and as you
pay off your mortgage. Method number seven is negative gearing and
so this is the opposite of positive gearing and it’s still in line with that buy and hold
strategy we talked about in method number one ,but with negative during the rental income
that you receive is less than the expenses that you are pying which means you need to
pay money every single month out of your wage and out of other income to keep that property
going because otherwise you default on your mortgage. The idea with negative gearing is
that you lose money for a certain period of time but the property goes up in value so
that when it comes time to sell you make much more money back. **Severely equivalent state**
paying $1000 a month to this property and you do that for two years that $24,000 but
if that property goes up $500,000 then you’ve got $76,000 in equity there because you know,
you’ve only payed the 24,900 **instead** 76 , obviously you have fees and stuff when you
sell, the goal is the property will grow faster than the money you’re putting into it or potentially
the goal could be that overtime rents will increase and that negatively gear properly
will turn into a positive cash flow property. Method number eight is commercial real estate
so this is different to residential real estate in quite a few different ways. firstly when
it comes to lending, you are likely to need a larger deposit the commercial real estate
with residential the goal always seems to be a 20% deposit and this allows you to avoid
lenders mortgage insurance, but when it comes to commercial property it tends to be around
30% deposit that you need. But the benefit with commercial property is there multiple
different benefits but probably the main benefits are that the leases are much longer on a lot
of commercial properties so rather than tenants signing a six-month lease the tenant might
sign a three-year or a ten-year lease on that property , so you’ve got more security of
income in some circumstances and on commercial property as well it’s usually the tenant’s
responsibility to pay for all the outgoings, so you’re talking about water, council rates
even things like repairs and maintenance become the responsibility of the tenant’s. So in
commercial property you may have the same yield as a residential property , but you
may have less expenses because more expenses are covered by the tenant, so this could mean
greater cash flow for you. Matter number nine is house and land packages, so this is when
you buy a block of land but you’ve got approval already done to build a house on and build
contract in place to build that house. So you see the signs up everywhere, well at leats
you see them where I live in the Gold Coast, house or land from $425,000 .Hourse or land
from $399,000 and basically what you’re doing is you’re buying a block of land and that
is going to be built on and deliver a house to you but
the house isn’t there yet so you’re buying the house and land , but you have to wait
for the house to be built and method number 10 is simply purchasing land itself without
any contract to build a house or built a property on it. And a lot of people do go ahead and
invest in land obviously lands very likely to be negative geared, because it’s pretty
hard to produce an income when you don’t have a dwelling on your block of land but you can
get great capital growth with land and it is a smaller investment than investing in
something that has a dwelling built on it because obviously it’s just land, you just
going off the land value and not how good the property is or how nice the kitchen what
I’ve put in is, so a lot of people do go ahead and invest in land as well.So there you have
10 common real estate investment strategies depending on you and depending on who you
are you may gravitate towards different investment strategies an investar who just wants to do
as a sideline thing and doesn’t want to have a great deal to do with their property might
like to invest in buy and hold strategy but investor who has more time and want to do
things quicker and get their hands dirty might benefit more from a renovation strategy or
creating dual occupancies or doing development because then you can actually create your
own equity through hard work . So there is a lot of different ways that you can invest,
I hope that this has given you some food for thought as to the different methods of investment
that there are, I love positive cash flow as I said it’s my favourite, I have a whole
course on how you can find positive cash flow properties and how you can research potential
areas that you want to invest in . If something like that sounds interesting to you then had
over to PositiveCashFlowAcademy.com and sign up there so I go through all these video training
tutorials on how to find positive cash flow properties yourself and how to find out things
like parcells, history, how the properties have been listed for the demographics of the
area all this difference stuff that’s super useful if you’re going to go ahead and invest.So
again that PositiveCashFlowAcademy.com or if you just want to see the properties that
I’ve listed then again go onproperty.com.au/properties and you’ll see all of those listings over
there.So until tomorrow remember your long-term success is only achieved one day at a time
and actually mixing up as well and so you don’t have to say,I am going to invest in
a positive cash flow property and that’s it. Or I am going to do it in a buz and hold method.
You can actually say I’m going to start by investing in a renovation project because
I would love to build some equity faster and then maybe if you build equity you might want
to spin it off into something like buy and hold that is less intensive or maybe then
want to scale that up and do development to get even more equity and then profits from
development go to buy and hold, go to negative gearing or go to commercial , it’s not one
is the best way to do it, it’s about working out what your financial goals are and then
creating strategies that get you towards your financial goals. But I am not a financial
advisor, so I cannot give you financial advice. , but I can help you make sense of yourselve
and your situation as much as possible.

9 Comments

  • Anthony Picard

    I don't know why these videos don't have thousands of views and you don't have hundreds of subscribers. They are awesome, informative, professional but also down to earth and easy to understand. Colour me impressed.

  • allan ximenes

    I know some strategies real estate, but here in Brazil don´t word because taxs is elevate, have you any strategies to use in the countries?

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  • E Property

    Buy and hold. Renovation. Dual occupancy. Subdivision. Development. Positve cashflow (love the most). negative cashflow. Commercial RE. House and land. Land.

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