Property Strategies for Advanced Investors

Most property investors will begin with investment strategies that offer greater leveraging potential.  These strategies include buy and hold, renovating, etc.  Lenders are most comfortable with these types of standard residential real estate securities, and usually require smaller deposit sizes.  This leveraging potential makes property investing attractive to investors, hence there are a large number of Australian’s seeking to build wealth through property.

Over time though, advanced investors often delve into more sophisticated property investing strategies to accelerate their wealth creation. Typically advanced property strategies require larger deposits and provide greater risk/return options for investors.  It is common for capital rich investors to seek strategies that earn greater returns (and risk) over time.

Usually advanced investors have the following characteristics:

• Strong capital positions
• Large stocks of existing equity in their portfolio
• A desire to have larger property deals – that is make large sized purchases and larger sized profits
• Experience in property, and a higher risk tolerance
• Seeking diversification away from residential real estate

Financing for these types of strategies usually involve different processes and reduced LVR’s to purchase.

Common advanced investment strategies include:

• Multiple-dwellings on one title: This is an opportunity for investors to buy an entire block of units. Offers a higher yield and land content/control of an entire building.
• Developing multi-unit dwellings: This is an opportunity for investors to build an entire block of units.  Value adding development with an ongoing yield.
• Buying commercial properties: Commercial properties typically require larger deposits, but offer a more certain yield (longer leases) and growth potential.
• Utilising funds in Self-Managed Super Fund (SMSF): Super funds can be used to purchase property. Usually large fund balances are required & hence it’s a strategy more commonly used by advanced investors.

In other blogs, we discuss the ins and outs of each investment strategy & how to finance it.