W
e are in a bear market. There, I said it! So often we hear that the very key to a successful Property Investment strategy is to stick to the basics. Never has this been a more potent cure to the economic disease that investors have to fight off in this recessionary climate. Here are a few 'gold nuggets' to bear in mind:
Creative Mindsets
Now this doesn't imply exotic financing arrangements that got us into this mess in the first place. At release, the property and stockmarket are going through a very difficult phase where property prices are either growing at sluggish rates or decreasing in many parts across the globe. Due to this many investors have simply stopped buying properties because their old methods had no effect anymore. Dare I say gone are the days of no money down finance deals, and add to these high interest rates that make Property Investment proposals seem extremely unattractive.
Ask yourself the question: Have you stopped buying, or is this market the catalyst that increases your property spending?
Warren Buffet, the world's most successful investor says that the market is a mechanism for transferring wealth from the impatient to the patient. Mr Buffett and his rich friends don't see the market downturn as an opportunity to scream, 'The sky is falling' at the top of their lungs. Rather the opposite is true that for the patient, savvy, ambitious investor, this is an ideal scenario to hunt for great value.
This really drills down to the core issue of differences in our mindsets. On the one side there are the patient value investors that look for an opportunity around every corner - literally! On the other side, there is the more cautious investor that tends to flock with the rest of the masses.
When all is said and done, the truth remains that there are always ways to make money from the property market. It is the difference in these mindsets and our ability to think creatively that separate the property gurus from the struggling investor searching for financial freedom.
Follow a systematic long term approach
Remember that investing in property is not day-trading shares. Although there might be similarities in analysing trends in these two investment vehicles, the time horizons are worlds apart. A successful Property Investment strategy needs to be underpinned by the realisation that you are in it for the long haul. Are there short term profits to be made? Off course there is, and certainly this something that you shouldn't turn a blind eye to. Be alert and make the most of these opportunities. However, true wealth creation is build by implementing a long term strategy of value addition in your portfolio, regardless of market ups and downs.
Transaction Structuring
This merely refers to your ability to purchase property within family trusts, self-managed superannuation funds and a range of vehicles in different tax jurisdictions across the world. Without getting technical here I would rest my case by merely saying every investor should have a tax-efficient structure in place aimed at maximizing your net return. This relates to income -, capital gains, inheritance- or any other related tax. Yes this requires more work and perhaps the input from professional advisors, but in the end it will amplify the growth in your portfolio to astonishing levels.
The property game has and never really will be rocket science. If you stick to these points and not let fear get in your way, it will provide solid foundations on which you can build a successful property empire.
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