Property Investment Tip #2: An Innovative Property Investment Strategy

Do you make crucial life decisions based on the flip of a coin or the roll of a dice? Yet isn't this how a great number of people invest today?

We’ve known for years that investment market commentaries is dealing in ever shorter time frames.

The stock market is currently zig-zagging a little: down one day and up the next, which is occasionally a signal that a correction could be due.

Recently we noticed that “the Cyprus bailout proves that the economy is doomed!” but today we are instead assured that “Cyprus is unimportant” - what was a bad investment yesterday becomes a great investment again today? We now have minute-by-minute market commentaries and it’s indeed a crazy world we live in.

Market gurus love to have us believe otherwise, but the immediate future is not really predictable (check out what they were saying 12 months before). The key thing to remember as an investor is this:

The more your investment plan relies upon the market moving in your favour in the near-term, the greater your chances of failure.

The financial press repeatedly reports share markets declining as a time to panic and the index appreciating as something to celebrate. But what if you had an investment plan whereby it doesn’t even make a difference whether markets move up or down?

It was Warren Buffett who said that the best investors are those who create a framework for successful investing and then can prevent emotions from corroding that framework. This is why automated investing is so efficient for people who have a regular income. By acquiring shares regularly through buying a pre-determined dollar value each month or each quarter, the investor remains emotionally unaffected by market hype.

The method is known as averaging or cost averaging - when the market goes down you effectively buy a greater number of shares, and thus will profit over the long run. It is sensible in cases like this to obtain a well-diversified product so that there is no likelihood of the investment dropping to zero in value.

Averaging works in property too, but due to the leverage the individual purchases have a tendency to symbolize a more material part of your portfolio, it becomes more important for investors to avoid experiencing significant losses.

Likewise in the world of real estate, market gurus like you to believe that they can foresee outcomes that you are unable to, which explains the “I envisage no development for 22.5 months”-type poppycock and “a new milk bar is projected to open in 2014 that should fuel capital growth” baloney.

Fortunately for property investors is that unlike the bourse, which is priced rationally for much (if not all) of the time, residential property is really a frequently imperfect market. Therefore, there are a number of strategies that can be employed to outperform the median prices so beloved of the financial media.

The first thing you can do is buy counter-cyclically in a city which has not recently experienced a boom.

1) Buy property below its intrinsic value;
2) In an area that has a long history of strong capital growth;
3) Search for a property with a twist - something special, special, different or scarce about the property; and
4) Purchase the type of property where you could “manufacture capital growth” through refurbishment, renovation or redevelopment.”

By utilizing these methods, you can ensure that you aren’t simply leaving your results to the roll of a dice.

Of course, it still makes sense to track what is happening in the world.

The Property Outlook Convention aims to provide investors with the latest information on the current property market conditions and innovative property investment strategies. It is organized by Wealth Mastery Academy, a company committed to providing solid financial education and wealth creation strategies to the masses.