Published on: 2011-07-25

Residential Investing

Residential InvestingResidential Investing

To date in 2011, investors have re-entered residential real estate with increasing enthusiasm. Of course, individual investors approach the market in different ways – some seek higher cash flow yields, others look for potential capital gains, or they may be among those that seek to secure land for future development.

But just what is a ‘lucrative investment’? Below is the opinion one of Hamilton’s most experienced property managers (himself a ‘perennial investor of 26 years’), David Kneebone, general manager of Lodge City Rentals.

David says while yield is important the true windfall comes when you identify a ‘hyper-growth’ area through solid research, observation, and calculated risk.

David’s investment tactics:

  1. Wealth generation is a combination of capital gains and cash flow.
  2. You’re better paying fair value in a blue chip suburb than paying less for a property in a suburb that no-one wants.
  3. Buy long term – so buy when you can afford to hold on.
  4. Invest in expert advice – save on paying for mistakes.
  5. Debt magnifies returns: Unpopular today, but don’t confuse debt that used to buy consumer products with debt that is used to generate income. Manageable and prudent levels of debt will leverage your investment returns over time.
  6. Specialise in growing your portfolio – thereby growing your wealth potential. Let an expert take care of the day-to-day management.

David has helped a number of investors develop their own criteria for residential investment. If you would like to discuss your entry or expansion in the investment property market, give him a call.