Property investment strategy

Your property investment team is one of your greatest assets as you grow your property portfolio.

Think about your property investment team in the same way you'd consider any other team. You're the selector and coach - your aim is to select the best players who can work together to get the job done.

Your team will include permanent players and players you keep on the reserve bench for when they're needed. Research your team carefully before you start investing in property to save time and money in the long run.

The permanent players in your property investment team will include:

• your ANZ home loan specialist
• your accountant
• your lawyer.

Your team might also contain the following reserves:

• real estate agents
• registered valuers
• property managers
• tradespeople.

Your accountant and lawyer can help you to decide on the best structure for you. The ownership structure you choose for your residential property investments will depend on your own circumstances and goals. Things to consider include:

• flexibility over time
• simplicity – a complex ownership structure isn't always necessary
• the ability to introduce other participants
• the growth of your property investment portfolio
• taxation
• the ability to exit your property investment if you need/want to.
  

It's important to buy investment property in a location where you expect higher than average capital gains (for reasons such as a good local economy, an increasing population or a low land supply for new development), unless you are primarily after yield (the return from your rental income).

To make money through investment property you need to buy wisely and choose a property:

• in a location with potential for improvement
• that provides a high yield
• that can be bought at a reduced price
• that has the potential for improvements that increase its value.

The best way to increase your investment property's value (and your income) is to add features that tenants desire and are willing to pay for (by an increase in rent). Examples are a garage or carport, an extra bedroom (adding to the building, reorganising existing rooms or adding a sleepout), carpets, fences, security alarms and whiteware. Even just making the place clean and tidy can give you a price advantage over other rental properties.

Improvements to your investment property are best considered (and budgeted for) before you buy it. When adding value, make sure the extra cost will achieve a high return on your investment.

Goal-setting is important in most aspects of life and it's true of property investment. Without a clear direction you'll find it difficult to co-ordinate your efforts in establishing an investment that matches your lifestyle, financial and life situation, skills and aspirations.

To begin with, ask yourself why you're investing in property. Is it to generate an income, is it to build wealth, is it a form of savings for retirement or is it a combination of all these?

• Do you have an investment period in mind? For example, you may want to retire in 20 years' time and provide a retirement income through investment property.
• What value of property do you want or need over this time? To answer this, consider the income you want from property.
• What type of investment property will you buy to meet your goal – e.g. five two-bedroom flats, three three-bedroom houses or something else?

Write your property investment goals down so you can measure them and review your progress towards achieving them. Remember, it's all about equity and cash flow, not necessarily the number of properties you own.