How To Choose The Right Property Investment Strategy For You (Day 25)
It’s important to choose the right property investment strategy for you. This will maximise your chance of success and make you a happier and more passionate investor.
Welcome to Day 25 of he 30 day property journey where over the next 30 days I’m helping you become a more competent investor.
Today we are discussing how to choose the right investment strategy for you.
There are many different investment strategies that you can choose as investor and they all have the ability to make you significant amounts money.
However, not every investment strategy is suited to you and it’s unlikely that you will be successful at every individual investment strategy. That is why it is important for you to find an investment strategy that suits your financial goals, suits who you are as a person and suits the amount of risks that you’re willing to take in your investment portfolio.
Find Your ‘Financial True North’
The first step that I recommend everyone takes is to find out what your ‘Financial True North’ is. In Day 1 we went through an activity to work out what your Financial True North is and the goals that you want to set for yourself.
In short a Financial True North is a goal that you set for yourself that balances your financial dreams with your lifestyle dreams. It is not just a financial figure that you want to achieve. It is the kind of life you want to achieve when you have that financial figure.
I use the example of the multi-billionaire Richard Branson. Yes he is a multi-billionaire and has a lot of money which we would all love. However, he works extremely hard and not all of us are willing to do that or to take the risks that he takes.
So first find out your Financial True North because this will determine which investment strategies suit you. Some investment strategies suit someone’s Financial True North better than yours and different investment strategies will suit your Financial True North.
Assess Your Options
The second thing to do is to then assess you options. I have created a full list of the 21 common property investment strategies in Australia. You can see the 21 different options that are there, read through the article and see which investment strategies stand out that you think may be good for you.
Narrow Your List of Options
The next thing to do is to narrow down that list of options. So rather than having 21 potential investment strategies you want to narrow down that risk to a maximum of 10 or preferably under 5 different investment strategies. When you invest it’s highly likely that you are going to use multiple different investment strategies.
You might be buying and holding for both positive cash flow and capital growth. You might be renovating and subdividing. There are many ways that you can invest using multiple strategies.
However, if you are generally going to have one to two of those strategies be your primary strategies and then everything else is secondary to that.
To begin to narrow down the list, look at the list and trying to assess whether this investment strategy is going to lead you towards your Financial True North.
Personally my Financial True North is $60,000 in passive income per year where I don’t have to spend a lot of time working on my properties. So for me positive cash flow is the perfect solution because it is a way that I can feasibly get to $60,000 per year and then once I achieved that there is no ongoing effort in order to manage those properties.
Research the Strategies
Once you’ve narrowed down the list it would then be time to do some more research into those particular strategies. You can search on Google for or read a book about your particular investment strategies.
If your particular investment strategy is positive cash flow for example then go through my website www.onproperty.com.au or join my membership site On Property Plus. Learn how to find positive cash flow properties, how to analyse them and how to work out more about that strategy.
If it’s renovation then do a course on renovation or look into renovation in more detail. If it is subdivision then find out how much it actually cost to subdivide properties and whether it’s going to work with your finances.
Begin doing some research on the particular strategies that you think may be of interest. This research could be simple like searching online and and reading a few articles or it could be more intense research like buying and reading an entire book, going to a course or doing an online webinar.
It’s up to you how in-depth you go into your research. At the end of the day you want to get to the point where you understand what is the best investment strategy for you so you can take the next step. When it came to positive cash flow property, it took reading the book by Steven McKnight called From 0 to 130 Properties in 3.5 years to really click in my mind that positive cash flow was the investment strategy that I wanted to use.
It’s very important to understand that all of the investment strategies that I have listed have the potential to generate you great wealth. One is not necessarily better than the other but one may be better for you personally than other strategies depending on who you are.
You could do all of them and be successful with all of them. But finding one that suits you and then excluding the rest and becoming a master at that one strategy gives you a higher chance of success.
Talk to People Who’ve Used the Strategies
The next thing I would try and do is to talk to people who have used that strategy. After you have done some research and decided that you want to invest a certain way then the next step would be to talk to some people who have used that investment strategy.
You can find people online in forums like www.propertyinvesting.com or www.somersoft.com and talk to people in those forums. You can attend meet-ups or events in your local area (which I talked about in Day 23) or you can try to find or pay for a mentor as well.
Try to talk to people who have used this strategy. Ask them about the pros and cons of the strategy and what difficulties did they face with the strategy. Learn from them as much as possible.
Choose Your Strategy
Lastly would be to choose your strategy once you’ve done your research and talked to people. It may be hard to choose. It might be easy to choose.
Once you do choose you’ll want to master that strategy. Master it through education and learning as much as possible about that particular strategy and then master it through actually implementing the things you learn and investing in property.
It is okay to change your mind along the way. However you should always have a plan and a strategy in mind that you’re working towards.
But if things have to change then they have to change but you just want to be careful of what people call ‘shiny object syndrome’. That is when you have a strategy, you are investing and it is moving you towards your goals but all of a sudden you attend a seminar and someone talks about a new way of investing and you see it as this shiny object and abandon what you were doing to go after a strategy that may not necessarily work for you just because it’s shiny and its new.
It is therefore important to stick to your path and try to master the strategy that you have decided on. If you have to change course along the way so be it. When you change to a new strategy then decide to become a master with that new strategy as well.
I hope that’s been helpful trying to find some ways for you to choose the right investment strategy. I haven’t gone into detail about all of the different investment strategies and that’s because I’ve already done that in episode 236 of the On Property Podcast.
It is the biggest list I have seen of different investment strategies and it will help you to begin the narrowing-down process.
The 30 day Property Journey is coming to an end in just five days but the best is still yet to come.
Tomorrow we are going to be talking about getting online and interacting on the forums so that you can move towards your goal of becoming a successful property investor and give you the support you need absolutely free.
I also have some more awesome episodes coming up where I discuss the 2-hour rule, conveyances and solicitors and the check that will change your life (on Day 30). So stay tuned for all of that content.
Until tomorrow stay positive.