What is your clients property investment strategy ?

It’s important as Advisors when working with your clients, that you help them to understanding that strategy is important when establishing a property portfolio.

Once timeframes to invest have been determined, entry, hold and exit factors need to be considered. Entry to the market must factor whether your client is investing for capital growth or cash flow as a priority.

If it’s a cash flow strategy, what yield needs to be achieved and does it need to negatively, neutrally or positively geared?

If it’s a capital growth strategy, to what extent can your client cash flow a negatively geared property if funds are borrowed?

Is it appropriate to have a mixture of capital growth and cash flow properties to balance their portfolio?

What type of diversification is required in the portfolio if any? This could be assessed based on property type, purpose (capital growth or yield) or location.

From a hold perspective, who is the type of tenant they are looking to lease the property - allowing them to hold it over the longer term. What features and amenities do they need? A family requires a very different set of criteria to a single tenant or a couple. They are crucial to their ability to hold the asset long term to enable it to grow in value over time and to also generate income to allow you to service interest repayments or reduce your debt. Knowing who they are (or aren’t) when they search for a property to purchase is imperative.

How long is the property to be held? One can argue that timing into a market is where you make money. While this can be correct and may be a primary driver when working to short-term timeframes or strategies, you need to do a lot of analysis and research and at the end of the day (even the experts who work in property research full time don’t always get it right).

Sometimes it’s more about just getting into and spending time IN the market rather than timing the market, however if the herd is being carried along and prices are escalating madly, it may be a good time to sit back and watch while investigating other opportunities that aren’t so hot.

What’s their exit strategy? Will they retire on the rents, refinance into retirement or sell some and pay down debt? The exit component is also about who will buy this property from them when they need to sell it. What is the market or demographic of the buyer for their property and how much competition will there likely be for that buyer? What is the level of scarcity associated with their property? The lower the competition, the greater the potential for their property to grow above the average in value and the greater the chance of it actually selling when they want.

Most people venture into the property sphere only to have very average property sold to them by selling agents, project marketers or property spruikers, who often are only interested in your clients ability to enter the market and they don’t really have any interest in their ability to hold or sell the property in the future. This could leave your client holding what sometimes isn’t a good asset after all, but it may take them years to find out. As always, buyer beware and remember they can seek unbiased help from a Licensed Buyers Agent or Advocate if you need it.

All of this goes towards establishing an investment strategy from which to use as a foundation to invest and of course can make a substantial difference to the outcome your clients can achieve if done properly.

Miriam Sandkuhler is the founder of Property Mavens - a specialist property advisory firm based in Melbourne.

Unlike most ‘Property Advisors’, Miriam is an Accredited Property Investment Advisor (PIAA), Licensed Estate Agent and REIV member and award nominated Buyer Agent, with 15 years of real estate experience in two states. She is also the author of the book Property Prosperity.

Miriam and her team excel at identifying high-performing property and strategically building a client’s portfolio with high capital and income growth assets. She is also a passionate advocate of fair play for all and complete accountability and transparency in the real estate industry. She has a strong track record helping investors and home buyers and believes education is the key to empowering people on their journey to achieving their goals.

Miriam is a regular real estate and investment media commentator and has published articles in Australian Property Investor, Property Observer, Smart Property Investment and Your Investment Property magazines, as well as having appeared on radio and in metro daily newspapers.