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The Sun-Herald

Don't lose focus of changing conditions

Investors have no control over macro economic factors like interest movements so they need to ensure that the strategy they implement today continues to work for them in the future.

An investment strategy that looked good at the start of the year may not be so solid in years to come.

A prime example is the positive cash flow strategy. Over the last 18 months we have seen the emergence of positive cash flow properties. While increases in rents have had a significant impact on this trend the main catalyst has been the very low interest rate environment.

As interest rates continue to climb over the next 12 months there is a danger some of these properties will transform into negative cash flow.

The property market is a complex place and there are a range of investment strategies you can implement.

In addition to positive cash flow there are negative geared, commercial, residential, off the plan, value add and development strategies.

All these strategies are unique. Each one will help you achieve different objectives and will expose you to various types and levels of risk.

There is no absolute right or wrong property investment strategy. The best one for you is determined by your individual circumstances and your current and future financial position.

Many investors get caught up in the marketing hype around the property market and fail to consider how their strategy will work over the long term.

They are often sold investments without taking into account changing market conditions.

Unfortunately the federal government contributes to this problem by failing to recognize property as a 'financial product'. This means the property investment advice sector is largely unregulated.

This lack of regulation leaves many investors confused and means they make ill-informed decisions.

To avoid costly mistakes take your eyes off the property market just for a moment and mute the noise from the marketing hype. Focus on yourself and develop a strategy that considers the changing market and is suitable for now and in the future.

Mark Armstrong is a Director of Property Planning Australia, propertyplanning.com.au