Whether you are a first time buyer or an experienced investor, achieving double-digit returns and profit requires a robust investment strategy. Real estate investment strategies vary in suitability depending on your risk profile and reasons for investing.

Each strategy should consider at minimum differing property attributes, timing of completion, market location, tax and legal implications, accessibility to foreign investors and availability of finance.

BUY TO LET: is the strategy of buying a property to rent out to tenants. In order to achieve reasonable returns through rental income, investors need to look for properties with a higher probability of strong rental increases. The risks of buy to let investing can be mitigated by thorough research on the location and the quality of the property, areas to focus on are:

• Discounted rental property, lower the cost of the property, with good rental rates will provide a higher yielding opportunity.
• Where supply-demand is not in equilibrium, and presents a positive opportunity for investors. That is, locations where there is tightening supply versus increasing demand.
• Properties with quick cheap renovations to boost rental beyond what is current market rate.
• Areas picked as potential targets for regeneration, infrastructural improvements or government initiatives.

Off The Plan: is the strategy where you buy before the property is complete. This type of investment allows for the acquisition of property at today’s prices. As you are purchasing at a price lower than the price of the unit when it is completed, there is a greater potential for higher return on investment. Cash outflow occurs in the following stages, reservation, generally 5-10% upon reservation, then after further progress with the contract and legal an amount 20% of the unit sales price. The remaining balance is paid upon completion, but this may vary slightly depending on arrangement with mortgage provider or developer. Thus illustrating, that Off The Plan provides investors with an opportunity to purchase a unit with very little money down. However, due to the nature of the strategy, due diligence on the following needs to be considered:

• Project team: reputation and previous experience including the developer, builder and architects.
• Time to completion: with variables such as construction costs impacting margins, it’s important to make sure development is completed within a reasonable time.
• Location: When visiting an Off The Plan site, there will not be a large amount to look at, so researching into the surrounding area, future infrastructure or further development should be considered.
• Price points: Look at similar built properties in the area, so assess whether the price is reasonable.
• Property specifications: always obtain a listing of internal and external specifications and artist impressions of what your investment will look like. This will provide quality assurance upon completion of the project, to ensure it is built as intended when you purchased.

There are a lot of other factors to consider in Off The Plan, the key message is to perform due diligence before purchasing. To know more about the risks and rewards of Off The Plan property, as well as view Atlas Blue recommended developments at Off The Plan stage, contact one of our Advisors.

BELOW MARKET VALUE (BMV): is not limited to one specific strategy, but encompasses a number of them. BMV investing is a strategy where you purchase real estate at significant discounts to their current fair value. Investing in the strategies below maybe one of the more profitable, as you can record instant equity gains from the day you purchase, and the signiciance of the discount usually shields from any further property price drops. Several examples of when this can occur include:

• Foreclosure: are those repossessed by financial institutions or the government and sold at below market value to bring these assets to cash as soon as possible. General mode of sale is through auctions.
• Distressed: are properties that are classified to be under significant cash/financial burdens, not necessarily repossessed by financial institutions. However may have some significant damage or are in poor conditions.
• Other cases where urgent cash needs occur

In all cases above, despite the potential for significant returns instantly, it is important to understand the nature of the strategy chosen as certain conditions are attached to the property which you may not be aware of. Risks can include: hard re-sell environment, with the BMV property being acquired in times of economic hardships; escalating refurbishment costs due to the quality of the property; or not being able to find tenants on a timely basis due to location of the property.