It is natural for those who buy or build investment properties in Perth to make decisions based on projected returns, before they actually know what those returns will be, and what will cost them in terms of money, time, or effort. You must know which of these you are willing to spend the most of on your investment strategy, and then plan your strategy around your resources.
“Buy and Hold”
This is the preferred strategy for a new investor who is working with limited funds. Here you purchase quality established properties in areas with the best chances of capital growth. It allows you to move slowly, at your own pace, and add investments to your portfolio on a gradual but consistent basis. By not selling you avoid having to pay selling costs and capital gains tax and can have your property revalued to reinvest your gains.
Being the most passive, this strategy will save you time and headaches; once appointing an expert property manger all you will need to do is go over inspection reports and numbers on a monthly basis.
Building is a great passive strategy, as long as you allow builders and property managers to do all the work. You aim build a house, rent it for more than the monthly costs of maintaining the property and loan, and then sell it upon completion or retirement.
Builders and property managers can take all of the emotion and stress out of property investment. You merely need to find a reputable builder who offers a turnkey package, and let him do his job. Then, when it is time to rent the property, hire a property manager.
Developing or Subdividing
Developing, or subdividing, is a huge step up the investment ladder. In this model, you divide a property into multiple parts and sell them either as land, off the plan or when built on completion . This requires a lot larger financial investment, and it also requires a lot more time and a lot more energy.
Since developing and subdividing are on larger scale, they require a lot more paperwork, a lot more interaction with the local government, and a lot more work in getting everything approved, and meeting all the conditions necessary to develop a subdivision. The main positive from this strategy is that you can make a lot of money. The main negative, besides time and effort, is that you can also lose a lot of money if you do not pick your location carefully and ensure the property can be subdivided as you plan.
Renovations can be a difficult way to make very much money, but you can produce good returns if you are very handy or know people who are very handy and will work with you at a greatly reduced fee. The main thing to remember with renovations is that you must negotiate the lowest price possible and put yourself in a position to sell it at the highest price possible.
This works best on unique properties in the hills or higher-end lifestyle locations, but you risk not being able to recoup your investment.
Whichever property investment strategy you decide upon, choose your investment wisely, and make sure to obtain competent, professional advice before you buy not afterwards.