Many Property Investors Get Stuck Here: Which Strategy Is Best?

Many people hear there are many different property investing strategies, but don’t know which one to choose. At the highest level, property investing can be categorised into only two strategies: passive (buy and hold) and active (buy and renovate or develop).

The term “strategy” is often overused in the current market. Many things currently referred to as “strategies” are more just techniques within one of these two strategies, ways to optimise how you invest within either passive or active, such as focusing on capital growth vs cash flow, loan and tax structures, choosing between capital cities and regional areas, adding a secondary dwelling, renovating, or subdividing and developing.

Once you separate strategy from technique, property investing becomes much clearer.

Strategy 1: Passive investing

This is the simpler and more common approach. You buy a property and hold it over time, not making changes to it, simply allowing the land value to appreciate and the rental income to support the holding cost. This is typically a long-term strategy.

Core of passive strategy: you buy a property and hold it, expecting it to be worth more over time.

Strategy 2: Active investing

This is the more complex approach. You buy a property and mechanically increase its value, for example by renovating, adding a granny flat, or subdividing or developing. This is typically a shorter-term, project-based strategy.

Core of active strategy: you buy a property and spend extra to improve it, aiming to create more value than the cost.

Takeaway

Both strategies start with owning the property. Once you see this, they are actually not in conflict. The question becomes: why not choose a property that can grow in value on its own, without relying on further action? Passive strategy is the foundation, and active strategy is just an add-on.

Not sure which strategy fits your situation? Our Portfolio Optimisation service can help you decide.