Property investments when done correctly and strategically pay out hefty dividends.

But while there is no secret to a profitable property investing venture, careful planning by understating supply and demand works well and succeeds when you apply the right strategies. 

This is true when you have a comprehensive property plan that serves as a guide to managing your business strategies.

Understanding supply and demand

In real estate parlance, supply refers to the volume of property assets the market can offer which can also be the number of properties available for sale. 

On the other hand, demand is how much of the properties are desired by buyers in the market.

So, when considering your property investment options it is critical to always consider supply and demand, as property prices move up and down in response to its changes. For instance, for property prices to rise, the market demand needs to exceed supply.

Start by getting down to the basics 

Start with a plan that follows a proven, known, and trusted strategy that has succeeded in a similar campaign as it will bring direction and clarity to your real estate property investment venture.

Next, develop your asset base by leveraging on capital growth followed by building a substantial asset to let your cash flow start moving.

The third step is to lower down the loan to value (LVR) ratio of the property portfolio, which would then allow you to earn off the earnings of that property.

However, investors need to know about avoiding the mistake of running after cash flow positive properties and not able to achieve a large asset base. While cash flow management is important, one should not disregard the fact that capital growth is what investing is all about.

Use a top-down strategy method

One of the most effective strategies in property investing is to use a top-down approach when choosing investment options, such as finding investment-grade properties that will make up your 5% portfolio and are the ones that succeed at providing substantial return rates.

Understand the economic cycle and start at the right stage 

Start looking for your investment property options and begin buying when you strike a balance between the right stage of the property and the economic cycle.

Assess how the economy is performing and what stage of the property cycle the market is in as you start looking at the big picture.

Consider the different states and know which ones are going through its property cycle then monitor for developments.

Finding the ideal location

Consider investing in large capital districts or cities where you can find strong pillars of the economy since this is a major growth indicator and higher wage rates per capita. However, you don’t have to time the cycle since you may not want to invest at the peak when you’re made to wait longer for capital growth.

Consider getting down to the suburbs

It’s time to start digging into the suburban areas of those capital cities especially where you can find a long history of capital growth beyond the average forecasts.

For instance, targeting suburbs with 50% to 100% capital growth over 10 years compared to other suburbs.

Another effective way of looking at it is to establish the demographics since these suburbs are indicative of more owner-occupiers who choose the location based on lifestyle preferences and can afford to pay higher premiums for products and services comparable to their higher rates of disposable incomes.

Identify the locations based on liveable streets that outshine others in terms of property valuation and overall investment performance among its residents and occupiers.

Scout for the best properties

Search for properties that appeal to owner-occupiers, but are below their intrinsic value sporting a good land to asset ratio. 

It would be advisable to find unique or special properties where you can further increase capital growth through potential redevelopment, refurbishing, or renovating activities instead of waiting long for the existing property to provide capital growth.

Settle for the best price

When you look for the right price it does not mean that it has to be the cheapest one that you can find, rather find one that matches its value and if you can negotiate for a better deal, so much the better.

A drop-dead discounted price for any property in a well-off area can be a great bargain, but it can also ring alarm bells such as issues with ownership or legal concerns that current owners make them decide to sell the property just to get rid of the problems. 

Nonetheless, it is always vital to ensure that you conduct due diligence when doing so to avoid long-term and costly repercussions.

Finally, when everything is done as it should be, it would be wise to review and explore all your investment goals and how you manage your income streams. Arm yourself with the knowledge and skills needed to effectively manage and achieve your investment goals. 

The sooner you get started, the faster you get to realise your targets and be rewarded handsomely for your hard work.