To maximise the potential for long-term capital growth, your investment strategy should be based around building a healthy property portfolio featuring a diverse range of properties. However, this doesn’t happen overnight.
Property investment is a long, rewarding journey that requires constant planning and strategic assessment to overcome any challenges that may arise. Naturally, the more properties you own the more challenges there will be, but this only means the greater the reward in the end.
If you are looking to expand and diversify your portfolio, the most important step will be to work closely with a property investment company. Here at Optimal Property Group, we are geared towards bringing our clients the best handpicked opportunities throughout Australia and working hard to build strong portfolios of extraordinary properties.
Whether you’re looking to purchase your first property, or your fourth or tenth, we can give you the guidance you need, so give us a call today. While you’re with us, here are some helpful tips for building a healthy property portfolio in Australia.
Property is a long-term investment, one that is likely to immerse you for many years. The longer you have to watch your properties grow into lucrative investments, the greater the chance will be that your portfolio will be robust and prosperous.
Start your investment journey as early as you can. The sooner you start, the more time you will have to develop a strong strategy, to develop good saving habits, to build a strong team, to educate yourself on how the market works, and to diversify your portfolio.
The first step towards building a prosperous property portfolio is assembling your team of experts – your partners who will be at your side every step of your journey. It is impossible to run a successful portfolio alone, you will need help from a range of experienced professionals along the way.
A great accountant is key when it comes to handling the finances within your portfolio and they are an important asset from the get-go. Your team will also need an experienced lawyer who can deal with all of your legal requirements – preferably someone experienced in property investment and can help you avoid costly mistakes as you negotiate new contracts.
An experienced property manager will ensure your peace of mind when it comes to the actual day-to-day management of your portfolio and this will become more important as you accumulate more properties over time. And finally, a property strategist will be your key adviser as to where the best value may be found and how to get the most out of your portfolio. They are perhaps the most important member of your team.
Your team will the driving force behind a successful portfolio. Choose them wisely.
Smart planning is essential to the growth of a portfolio, and this is crucial right from the start. Investors should identify their financial goals, lifestyle ambitions and what they hope to get out of their properties in the early stages of their portfolio in order to set an objective to work towards.
Of course, this may change multiple times throughout the different stages of your investment journey, but this only means that your journey is progressing. This is where your property strategist will be a very important asset. They will be able to help you plan and provide you access to the properties best suited to your goals, as well as advise you on the best time to invest.
As your portfolio progresses and diversifies, they will guide your towards the most lucrative option according to your plan. Even as you’re planning your exit strategy, your strategist will be able to advise on the best course of action, whether it’s to downsize, maximise income, create a generational legacy or realise capital gains made through your portfolio.
Starting off with a strong investment will have a huge impact on the continued growth of your portfolio, so consider your first property very carefully. Do your homework, alongside your strategist, as to which properties are positioned to increase in value and will provide a solid foundation for your portfolio to grow upon. You can read more on buying your first investment property here.
Once you have seen your first investment through, are comfortable financially and ready to take on the risk of owning multiple properties, then it’s time to think about purchasing another. This process may be very different from when you bought your first; markets change and the property cycle be going through and entirely different phase to what is was several years ago. So again, doing your homework is crucial.
Remember, a fruitful portfolio isn’t necessarily the one with the most properties, but the one with those that perform the best, so making sure you thoroughly research your options and opt for those which are geared towards long-term capital growth is crucial.
Take a look at our article on how to find the best suburbs to invest in.
This brings us to the point of diversification. When buying properties, it is often tempting to invest in locations you are familiar with. You tend to know your own city best, and when it comes to investing your hard earned money, it might be hard to pour it into somewhere you have little knowledge of, or no connection with. This is the pitfall of many investors looking to build a prosperous portfolio.
An excellent strategy for maximising capital gains is to develop a geographically diverse property portfolio.
Here at Optimal, we always advise our clients to stick to capital cities when hunting around for investments. We also advise our clients looking to purchase their next property to look to capital cities that they don’t already have an investment in. A strategic spread of properties will mean that you will be in a better position to weather any financial fluctuations from changes in the markets across different capital cities.
The diversification model can be applied the cities themselves too. If you do opt to stick to one city, then having a strategic spread of properties in different locations will ensure greater stability within your portfolio.
When it comes to building a healthy portfolio, you don’t always have to go it alone. Joint ventures can be a great way to gain access properties that both you and your partner may not have the financial means to otherwise.
Partnerships can be complicated for a number of reasons, so make sure you work closely with your lawyer to seek advice about any agreements made and when negotiating contracts. Your accountant will also be a key figure here.
Whether you’re looking to purchase your first property, or your fourth or tenth, we can give you the guidance you need.
If you have any questions about building a prosperous property portfolio in Australia, feel free to get in touch today, we’d be more than happy to help.