Having a clear investment strategy can be the difference between merely owning real estate and building genuine wealth.
Our latest Property Sentiment Report, however, reveals a surprising insight: a significant number of investors are navigating the market without a comprehensive plan.
Developing a thought-out plan is a crucial step when building a property portfolio. A well-crafted plan is more than a financial guide, it acts as a blueprint, allowing investors to anticipate the potential impacts of various events and life stages.
Investors that plan ahead are also better able to identify the types of properties that will help them achieve their goals – not just today, but throughout the long term.
Our latest sentiment survey shows encouraging trends in this area. We’re seeing more investors adopting a plan for their property portfolio. According to the survey:
- 15.7% of respondents now have a detailed, written plan in place, up from 11% in 2023.
- 54.7% are working towards some sort of plan, even if it’s not set out in writing – an increase from 45% last year.
- While 29.6% of investors still have no plan in place, this is a marked improvement from the previous year.
It is important to begin planning at the start of your investment journey. An informed first purchase is critical in setting the right foundations for investors to continue growing their property portfolio.
A lot of investors will use the equity growth from their first property to expand their asset base in future, so the fact that so many aren’t getting advice on the right properties to target is concerning.
Key considerations for your property plan
- Define your goals: Are you looking for long-term capital growth, regular income, or a mixture of both? Different types of properties are better suited to each of these goals.
- Assess your risk tolerance: How much risk are you comfortable taking on? This can shape the type of property investment strategy that will help you achieve your goals.
- Evaluate your financial capacity: Be realistic about what you can achieve with your current resources and consider how your circumstances might change in the future.
- Choose your property type wisely: The type of property you choose can have a big impact on your investment strategy and can deliver varying results.
- Consider location carefully: Look beyond your preferred suburbs and consider factors like current and future supply and demand, planned infrastructure, and rezoning.
- Plan for active management: Successful property investment isn’t just about owning property; it’s about maintaining and optimising your investments over time.
The benefits of planning grow with your portfolio
Interestingly, our survey revealed a correlation between portfolio size and having a property plan in place. The larger the portfolio, the more likely investors are to have had an initial plan.
Among respondents with two to four properties, nearly eight out of ten (79%) have some form of plan. This figure rises to an impressive 100% for those with 11 or more properties. Conversely, only 60% of respondents with one investment property have a plan in place. These results highlight the importance of using a property plan to start and grow a property portfolio.
Property is a significant investment, both in terms of the capital value of the asset and, in many cases, the accompanying debt. The large sums involved make planning essential. But it’s not just about the financial commitment – each investor has unique needs and goals.
Add in volatile property markets that comprise different types of properties and various sub-markets that move at different speeds, and it’s easy to see why there’s no single ‘one-size-fits-all’ plan that suits every investor.
A well-considered plan allows you to:
- Align your property investments with your long-term financial goals.
- Anticipate and prepare for various life events and market changes.
- Make more informed decisions about property types and locations.
- Manage your portfolio more effectively.
- Adapt your strategy as your needs and circumstances evolve.
For those just starting their property investment journey, having a plan is particularly crucial. It can act as a roadmap to portfolio growth, helping you navigate the complexities of the property market with greater confidence.
Creating a comprehensive property plan isn’t always straightforward, especially if you’re new to investing. This is where the support of expert advisers can make a real difference.
And remember, a good property plan is not set in stone. It should be flexible enough to adapt to changes in your personal circumstances, as well as shifts in the property market and broader economic conditions.
Whether you’re a seasoned investor with multiple properties or just starting out, having a solid property plan is key to long-term success. It provides direction, helps you make informed decisions, and increases your chances of achieving your investment goals.
If you don’t already have a property plan in place, now is the time to start.
And if you do have a plan, remember to review it regularly to ensure it remains aligned with your goals and current market conditions.
With a well-crafted plan as your guide, you’ll be better equipped to navigate the property investment landscape and build a portfolio that serves your long-term financial objectives.