Tailored Investment Strategy
Investors should have a tailored strategy, writes Ben Plohl. Image – Stock.
  • Goal setting is vital at the outset
  • Understand your risk profile
  • Consider the best ownership structures

The most successful investors follow a ‘tailored strategy’ to ensure every property in their portfolio is pulling its own weight.

Of course, the best time to create this blueprint is at the start of a property investment journey, but it can also be done at any stage.

While it is impossible to forecast what might happen decades into anyone’s future, having a clear set of goals, as well as steps to get there, can help to create a sustainable property investment portfolio.

A tailored investment strategy includes the following elements.

Goal setting

Each person has their own individual goals and dreams, which is why it’s vital to understand what these are at the outset.

When it comes to setting financial goals via strategic property investment, your age will have to be taken into consideration.

This is because a young person in their 20s has much more time on their side than someone in their 50s to experience significant capital growth.

However, regardless of your age, growing a property investment portfolio can make a big difference to your financial future.

It is during this section of the process that we also create some short-, medium- and long-term objectives, which could be regarding property purchases, your cash flow, or your capital growth position at certain stages of your working life.

Know your risk profile

Just as we all have unique personalities, so do we all also have individual risk profiles or appetites.

Now, strategic property investment should never be a riskier proposition, but some people are just not comfortable having a number of mortgages – even if tenants are fundamentally paying them off for you.

One of the best ways to change your thinking about property investment risk is to understand that mortgages are classed as ‘good debt’.

That is, a property loan debt is attached to an income-producing asset that is also growing in value over the years.

On top of that, the interest proportion of the loan is tax-deductible.

Our investment philosophy involves the creation of a sustainable portfolio, which generally can mean about five or six properties depending on your age and other factors.

Our tailored investment strategies also include buying in strategic locations around the nation to make the most of different market cycles.

Structuring 

Another element of a tailored investment strategy is understanding the best ownership and loan structures for you.

Depending on your individual circumstances, it may be preferable to own properties in your own name, as joint owners or tenants in common with your partner, or within a trust or your self-managed superannuation fund.

Again, there is no one-size fits-all model for this, which is why it’s vital to have an expert ascertain which ownership structure is the right one for each one of your investment property purchases.

Likewise, it is important to understand the best property loan structures for each asset within your portfolio.

For example, this can mean assessing whether an equity release from your home or one of your investment properties will be the best option to help finance your next purchase.

Similarly, again depending on your own unique circumstances, deciding whether a fixed or a variable interest rate home loan will provide the best outcome for you is imperative.

As you can see, there should be no place for a cookie-cutter approach when it comes to successful property investment or the creation of a tailored investment strategy.

Rather, the creation of a strategic property portfolio must always be customised to suit each person’s unique circumstances as well as their individual financial goals.

~~

Before making any decisions, please do your own independent research, taking into account your own situation. This article does not purport to provide financial, taxation, or investment advice. See our Terms of Use.

You May Also Like

RNY Property Trust delists after major vote

Sydney real estate firm voted off the ASX after 2 years suspension from trading…

Rental bubble should encourage investors, says M Property

M/Property believes that more investors should take advantage of current market conditions..

Sunshine Coast sales and rentals severely undersupplied

A beachside dream house might be out of reach for many with undersupply a major issue…

Insights on the investment market: JLL research

Research from JLL shows five major themes for investors to look out for in the Australia real estate investment market for 2021