Choosing investments: How to create a strong property portfolio

By the resi financial blog team, 28 August 2014

How to choose the right investment property

Creating the perfect property investment portfolio isn't something that happens by chance. Becoming successful in this field takes time, effort and research to reach the top of your game. There are a number of different things to take into consideration when you're looking at taking out an investment loan and moving into your local property market. However, one of the backbones of creating a strong property portfolio is diversity. 

Here are some tips to help you grasp the basics of building a satisfactory and - more importantly - profitable portfolio for you and your future. 

Keep things varied

The basic rule of thumb for creating a property portfolio is to create a diverse collection of dwellings that can't be shaken by any one economic event. Two main property investment types are detached houses and apartments with each market dictated by different pressures. 

For example, detached homes tend to be more suited to long-term tenants like families and those interested in settling down for an extended period of time. This makes them great for people interested in capital gains and a healthy nest egg that grows over time. 

On the other hand, apartments tend to be more suitable for young professionals and shorter lease conditions. Because they're often found in vibrant, fast-paced sections of the city, they can often go through explosive stages of growth before dialing it back for a period. 

Taking these basic differences to heart means having a collection of both types to dip into throughout the year, allowing you to continually see growth across your portfolio while working towards an overall profitable end results. 

Location, location, location

Likewise, different areas are prone to varying degrees of growth. Therefore, taking the time to purchase a wide range of different properties in different markets could be a brilliant move to make. For example, major metropolitan areas like Sydney or Melbourne are currently in the middle of a property boom that could be great news for investors in the near future. 

However, it's also important to look into the regional areas. With the rising strength of the nation's natural resources industry and an impending population boom over the coming decades, these areas could begin to see growth as employment shifts into these outer locations. 

This is where research comes in handy. There are a number of different sources to access that can help you see the projected future growth of certain cities or areas - including the growth of residential numbers - which can be collated and used to make an informed decision about potential hotspots. 

Furthermore, getting in contact with a real estate professional is the best move to make to discuss these trends and changes. Their expertise and insight can be extremely helpful when piecing together your investment plans. 

Categories: Home Loans, Property Investment