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Hold, flip, rent? – The different ways to invest in property

Buying real estate has long been considered a solid way of building wealth, but there’s more than one strategy when it comes to investing in property, with each requiring a different mindset and approach.

So, let’s look at the different ways to invest in property and what’s involved in each…

Hold

Australian property prices have historically increased consistently over time, with median house price growth averaging 5.9 per cent per annum between 2004 and 2024, according to CEIC data.

In theory that means the longer you hold a property, the more valuable it will become, allowing you to eventually sell and realise a significant capital gain.

That said, there are of course nuances and Australia doesn’t have a one-speed property market. Different areas and regions experience property increases and decreases at different rates, depending on an array of factors.

Meanwhile, the ‘hold’ strategy is a long-term one. Although the past few years have bucked this trend in some areas, major price rises don’t usually happen in a short period. 

It requires you to commit to the property for the long-term either as your primary residence or investment in order to realise a financial gain.

Flip

Flipping a property involves finding something in a growth area or property hotspot that will command a higher price if you improve or renovate it.

It’s a short-term strategy designed to realise a capital gain within a couple of years, and it’s a popular trend courtesy of Australia’s love of TV renovation shows such as The Block.

However, flipping needs to be carefully considered and weighed up against your current financial position and also things like taxation implications.

If you are intending to ‘flip’ a property, you need to go in with a very clear idea of the condition of the property, and the cost of the works required, along with a plan and budget.

Rent

Purchasing an investment property is a well known wealth building strategy for a variety of reasons, including:

  • Immediate income from rent
  • Long term capital gain, and
  • Tax incentives

But while it’s a popular strategy, it has both pros and cons. In addition to income there will be outgoings including rates, loan repayments, repairs and maintenance, and more.

As a rental owner, you also have obligations, including ensuring the property is up to par, the renter’s rights are respected and repairs are made in a timely manner.

But the ultimate aim is to achieve two outcomes:

  • Derive rent from the property or offset your taxable income in the short-term
  • Enjoy long-term capital gain due to the property increasing in value over time.

What’s right for you

Ultimately, whether or not you invest in property, the strategy you use, and the aim you hope to achieve are personal decisions, which are based on your financial position, goals, life stage and a whole lot more.

But should you decide to buy real estate, it’s important to educate yourself about the market along with the pros, cons, risks and financial considerations long before you sign on the dotted line.

How we can help

If you’re considering buying or selling a property and seeking to understand the current market conditions, why not chat with one of our friendly agents to understand how we can help?

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