One of the best things you can do when you’re first looking at how to buy an investment property is to create a long-term strategic plan for the future. Having such a plan is a good idea as it makes you sit down and focus on your priorities, as well as give you a clear way forward. Property experts suggest that to start a truly successful property portfolio your plan should cover at least the next 10 to 20 years.
Successful Long Term Strategies
While making short-term gains from property can still be achieved in this market, it is a far less risky proposition to plan for capital growth and rental returns over a 10 to 20 year period. This is because while the market can fluctuate quite a bit over the short term, it will routinely produce a steady return over a 20 year period. Indeed, according to a Russell Investments Long-Term Investing report from last year, residential investment property outperformed Australian shares over this period.
There are other reasons to create a long term strategy if you’re looking at how to buy an investment property, including:
- If you want to start with one property, then use its equity to buy additional investment properties. Building a sustainable property portfolio like this can take time, however it is one of the best ways to achieve a steady income stream and a nest egg for the future. Your strategic plan in this case should contain timeframes for purchasing additional properties, as well as a clear financial plan for building up equity along the way. Always talk to your financial advisor when creating and reviewing your financial plans, but you can also find a property investment company such as Ironfish to help to you develop a strategy that works for you over the long term.
- It gives you a financial plan to follow, rather than just making ad hoc investment decisions. A good property investment plan should include contingency measures in case you need extra money, want to take on extra debt or need to change your strategy in any way.
An investment strategy does not have to be a complex document, but it should be as detailed as you require. It is important also to think carefully about factors such as your level of risk appetite – that is, how much risk you want to be taking on over the long term – as well as your goals for the future. For example, perhaps you’d like to retire early and have a nest egg for financial security, or maybe you’d like to pass on an investment property to your children.
Professionals such as Ironfish will be able to assist you with looking at realistic options to make these goals a reality, and they can help you create a sustainable long term plan that gives you the flexibility to take advantage of opportunities as they arise.