Investing in property isn’t just an upper-income hobby. It’s a great way for Australians to add an extra stream of revenue to their income, create a nest egg for retirement, or leave a safety net for their kids. Plus, you don’t have to be an expert to invest in property! As long as you do thorough research and have the capital, anyone can do it. 

When the topic of property investment comes up, the first thing that jumps into most people’s minds is the single-tenant rental property. As a first-time investor, this is likely the main strategy you’re considering. And while it can be a great choice for new property investors, there are many other ways to make money from property investments. 

Each strategy we explore below requires varying amounts of expertise, is more or less hands-on, and produces varying rates of return.

There is no one-size-fits-all approach to property investment. 

As a first-time investor, the idea of REIGs or REITs are often attractive because they require the least time and effort. But some investors prefer the tangibility and higher level of control involved in buying to rent or hold. 

When it comes down to it, you should choose the strategy that works best for you and that you feel most confident in. But a thorough understanding of all the strategies available is essential in making an informed decision – so that you can continue to reap the rewards further down the line.

Below, we outline five investment strategies you should consider as a new property investor.

1. Buy-To-Rent

Rental properties are the first thing that comes to mind for most people when you mention property investment. And for first-time investors, they are a good option because they are easy to set up, fairly simple to run, and don’t require a whole lot of expert knowledge. 

Plus, they provide a regular passive income in the form of rent. On the other hand, they don’t offer incredibly impressive returns, and it can be pretty tedious to manage tenants. If you do go this route, make sure you’re clued up on the best locations for rental properties as well as how to correctly price rent.

2. Buy and Hold

Also known as rehabbing, this is a step up from the simple buy-to-rent approach. It involves fixing up the property just enough that it can perform well as a rental property. From there, you can rent your property and potentially sell it when the market is favourable.

This approach relies on the idea that properties generally appreciate in value over time, and your renovations will pay off down the line. The key to successful buying and holding is knowing the right property to buy, which involves careful research. You need to understand your target market, what appeals to renters, and how to increase your property’s value over time.

3. House Flipping

Although there is usually some rehabbing involved in house flipping too, the difference is that you sell the properties quickly instead of holding onto them. The key is doing just enough renovations so that you can sell the property at a maximum profit without having spent too much on the rehab process. 

This strategy also relies on appreciation—you buy the property at a time of rising values, and sell in the same market. Note that house flipping is not a passive investment, and is therefore not generally recommended for inexperienced investors. To be successful, it relies on a whole host of factors, such as a way of procuring materials at affordable rates, a crew you can rely on, and significant knowledge
of the housing market.

4. Real Estate Investment Trusts (REITs)

A REIT is created when a corporation uses the investor’s (your!) money to purchase and operate income properties. Instead of buying and managing the property yourself, you buy it on the exchange like any other stock.

Although a less traditional option than buying to rent, this strategy also offers Aussie investors a reliable stream of passive income, without the hassle and time commitment of managing the property yourself. Plus, REITs offer the ordinary investor entry into non-residential investments, such as malls and office buildings.

The downside is that like any hands-off investment, returns are generally lower than for properties you actively manage.

5. Real Estate Investment Groups (REIGs)

An REIG works by pooling your finances with other investors to invest in property, whether it be buying to rent, buying and holding, or even house flipping. It’s not just getting your mates together and buying a house, though—there are established REIGs that offer varying degrees of participation. 

Unlike a REIT, and REIG is not a taxable corporation and is governed simply by private agreements. The flip-side of this is that it can open the door to unscrupulous managers. But joining a trusted REIG can be a great option for new investors, as you can learn from others with more property investing experience. It also gives you a stake in physical real estate, as opposed to a REIT which operates more like a stock.

However you go about investing in rental property, make doing your homework your number one priority. It’s not as simple as buying a house and finding tenants. You need to consider all angles, from fluctuations in the housing market to landlord’s insurance and everything in between.

The time you spend learning about the topic will pay off down the line.

By Margot Mora. Margot is a content champion for a variety of online publications. She often covers topics that cater to business owners and entrepreneurs with a strong focus on legal finances, business management, and a few other topics.