What’s the investment strategy of one of Australia’s leading real estate gurus?
Property Observer reported real estate expert John McGrath revealed his property investment strategy at a Property Millionaires Tour a while ago.
1. Have a plan and be disciplined in your approach
“If you get this right this is a license to print money for savvy property investors.
“The difference between a great property investment and poor one can be an enormous amount of money over 5 years.
So really be disciplined.”
2. Research, research, research
“Make sure you know more information than anyone else on the planet about properties that fall into your plan.”
3. Adopt a capital growth strategy
“I recommend you focus more on capital growth.
The yield is important, it needs to pay the mortgage but for me the capital growth is where you’re going to get the best bang for buck.”
4. Location, position, aspect
“It’s not only location but position and aspect.
It’s very important.
North-facing, light, best street best side of the best street is really what we need to be focussing on.”
5. Don’t focus on bargains – they rarely have a future
“Things that no one else wants, probably in five years no one else will want then. Don’t confuse that with a good opportunity for genuine reasons.
“Sometimes you find a vendor that’s bought another property, for some reason it’s passed in at auction, the buyer didn’t get their finance ready, but you can buy it today.
“You’ve researched it, it’s in your plan and it ticks your boxes and you are absolutely sure that this is 10% under market value then that’s fine.
“But I get scared when a friend calls up and says ‘I bought this great bargain today’.
I say ‘my god where is it’.
I’d much rather you said ‘I went to an auction and I bid against 12 other people and I paid a little bit more than I thought I might have to but I bought a great home in a great street.’
“That makes me a lot happier.”
6. Utilise the power of leverage but never overstretch
“Once you’ve bought and the prices have gone up then look at the opportunity to extend and build on your investment portfolio.
But never overstretch yourself”.
7. Buy hold and keep buying
“This is terrible for an estate agent to say because I won’t make more money.
But I think this is this strategy is to build a portfolio. In 10, 15, 20 years you can buy several properties by leveraging, adding value, putting the right tenants in place and growing it from there.”