Is a ho-hum property investing strategy the winning formula?

Buying a property can be a real thrill.

Walking through open homes, signing yourself up to a significant loan, becoming a landlord – it’s enough to get even seasoned investors a little giddy with the excitement of it all. 

Then... then the property just sits.

And waits.

Every now and then you check in and make sure your asking rent is in line with the market.

You might do some improvements, or you might have a poor tenant to deal with.

But generally speaking, properties that are in your portfolio for long-term growth won’t keep you all that excited as time marches on.

You might not think so – but this is a good thing!

The reality is that as an investor, I wouldn’t have it any other way.  

Buying real estate isn’t about high-stakes, heart-racing snap decisions to make a quick buck.

It’s about using time-honoured processes to choose properties that can happily marinate on the market for 30 years and accumulate funds on your behalf until you retire.

The real excitement of investing is in knowing that you’re doing something that plenty of people dream about, but never do.

It’s about knowing that you’re actively taking steps towards a future that others might only ever dream about.

When you take the slow and steady approach, you’re setting yourself up for twilight years that can be full of every bit of excitement you can handle.

And opting for a time-proven and ‘boring’ strategy means you must avoid the adrenaline-fuelled pitfalls that can overcome even experienced investors.

Taking emotion out of the equation

If you buy the home on the hill or the quaint country shack just because you simply love it, then you’re buying with your emotions rather than any real strategy smarts.

Sure, buying a 3-bed, 2-bath suburban home near schools might not be exciting, but if it’s a property that is going to grow over the long term, then it’s a better bet for reaching your future goals.

A ‘safe’ and ‘boring’ strategy is one that encompasses properties in high-demand areas, with sound infrastructure and desirable amenities, and either a history of excellent growth or plans in place that will create growth in the future.

Whether you like the property or not, whether it’s your style or size or location or not, isn’t part of the buying process.

You can manufacture your own growth through renovation and redevelopment, and you can diversify your portfolio with different dwellings and locations, but you shouldn’t buy something simply because you like it.

Stick to the proven formula for optimal capital growth over time and you’ll be on the right path towards property success.

Chasing ‘hot’ markets for quick profit

There are far too many sad and sorry stories of investors who jumped onto our mining town’s skyrocketing market, and now have portfolios weighed down by properties that busted with the end of the mining boom.

There might be some who walked away with a substantial profit, and the appeal of making a quick buck is pretty thrilling.

But many, many more walked away broke, paying for mortgages on over-valued homes that are rotting through their financial position.

Unless you really know what you’re doing, mining markets and other, similar one-industry towns, are very high risk.

A better strategy is to take the ‘slow and steady’ approach.

Look at suburbs that are underpinned by a diverse and strong economy that offers job creation and long-term stability.

These are the blue-chip suburbs that form the basis of many successful investors’ portfolios.

Why?

Because ultimately, successful investors are happy to risk being ‘boring’ if it means sticking to their plan, rejoicing in their property’s growth, and looking forward to exciting financial results in the future.

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About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.