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How to work out the best investment strategy

How to work out the best investment strategy

By Bianca Dabu | 17 April 2018

Prior to releasing a book about property investment, The Property Mentors’ Matthew Bateman and Luke Harris spent around two decades creating wealth through real estate assets, building multimillion-dollar portfolios along the way. How did they do it?

Mr Bateman and Mr Harris put emphasis on goal-setting as the first step to investment planning.

According to Mr Harris: “Everybody wants to make money but most investors haven't actually identified specifically what they're trying to achieve for their own circumstances.”

With a crystal clear goal, they believe that it could be a lot easier to go through the whole investment process—from research to purchasing and management—again and again, no matter its complexities.

Mr Harris said: “Everyone's got different goals, but rather than trying to fit into a cookie cutter type of system, work backwards from the end right back to where you're at today."

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“When you get a clear understanding of your point A position and how you get there, you can work out your point B position or what you’re actually trying to invest for, then bridge the gap between the two,” he added.

Pre-investment questions

As easy as it may sounds, bridging Point A and Point B in your investment journey takes a lot of time, effort and money.

Considering all the factors that come into play in property investment, it could be daunting just to hold one property—and more so to build a multi-property portfolio.

To make it easier, Mr Bateman and Mr Harris created a checklist to work out a strategy that will work best for your wealth-creation journey:

Cash flow or capital growth?

An important first question, Mr Bateman said.

Short-term or long-term?

If you answered capital growth in the first question, you are more likely to pick long-term investments.

Full retail or get wholesale discounts?

Continuing the pattern, since you chose to hold properties for a long period of time, you want to be able to buy and hold them for the lowest possible price. At this point, you may already have an idea how to go about your investment journey.

Mr Bateman said: “Instead of simply asking where to buy, what we've just done is we've redirected the conversation to actually working out a strategy.”

“With three questions we've worked out that you want to buy for the long term, you want to buy for maximum capital growth but you also want to get a pretty good deal into this so that you're locking in some of your profits up front,” he added.

How much are you willing to pay?

This is to determine further parameters to be used to identify where and what to buy, according to Mr Bateman.

Your strategy, your results

Mr Bateman and Mr Harris agree that it’s important to ask the above-mentioned pre-investment questions to determine which strategy will work best for you. After all, no two investment journeys are ever the same.

A property that worked perfectly for another investor might turn out to be a pitfall for you.

By crafting a strategy that suits your personal circumstances—capabilities, limitations and goals—you can maximise the opportunities present in whichever market you choose to enter.

Mr Harris said: “A lot of investors sit on the sideline waiting for the perfect property to present themselves, but then, you're missing out on really good opportunities because you're waiting for the perfect one. Chances are, you're not going to find the perfect one.”

“Imperfect action is better than perfect inaction,” he concluded.

 

Tune in to Matthew Bateman and Luke Harris’ episode on The Smart Property Investment Show to know more about how to get the best results from your investments.

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How to work out the best investment strategy
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