Property investment is one of the most reliable ways to build long-term wealth, but it requires a strategic approach. Mayfield Director John Carew discussed the key strategies for achieving success in property investment, and here’s what he had to say about building wealth through real estate over the long term.
1. Focus on Quality, Not Quantity
One of the most important strategies for building wealth through property is to focus on quality assets rather than quantity. “While you might get a higher yield in regional areas, the capital growth in those areas is often limited. Over time, it’s the capital growth that builds wealth, not just the rental yield.”
Prioritise properties in prime locations with strong demand and limited supply. These assets are more likely to deliver consistent capital growth over the long term, even if the rental yield is lower.
2. Think Long-Term
Property investment is not a get-rich-quick scheme. John stressed building wealth through real estate requires a long-term mindset. The magic of compound interest and steady capital growth only works if you hold onto your investments for an extended period. “When we buy properties for our clients, we’re looking at what this property will be worth in 10, 20, or 30 years. That’s where you make serious wealth.”
Adopt a long-term perspective when investing in property. Avoid the temptation to sell too soon, and focus on holding quality assets that will appreciate over time.
3. Avoid Common Pitfalls
John highlighted several common mistakes investors make, which can hinder their ability to build wealth through property. One of the biggest pitfalls is buying properties in areas with unlimited supply, such as off-the-plan apartments or house-and-land packages in new developments. “A lot of investors buy properties in areas with almost unlimited supply, and although the yield might be good, the capital growth is very low,” John said. “They get stuck and can’t afford to scale their portfolio. That’s where a lot of investors go wrong.”
Avoid investing in properties in oversupplied areas. Instead, focus on locations with strong demand and limited supply, as these are more likely to deliver consistent capital growth.
4. Leverage Equity to Scale Your Portfolio
One of the most powerful strategies for building wealth through property is leveraging equity to purchase additional properties. As your properties increase in value, you can use the equity to fund further investments.
“The old adage is money makes money,” John said. “If you’re able to buy quality assets that have consistent rental yield and steady capital growth, you can take equity out and go again. That’s how you scale your portfolio over time.”
Use the equity in your existing properties to fund new investments. This allows you to grow your portfolio without needing significant additional capital.
5. Consider Value-Add Strategies
For those looking to accelerate their wealth creation, John suggested considering value-add strategies. These involve purchasing properties with potential for improvement, such as renovating an older apartment or developing a duplex.
“Some people look at duplexes or knock-down rebuilds,” John said. “There are more aggressive strategies that can increase the speed at which you create equity in properties. But these strategies require a strong cash flow position and a buffer to cover the costs.”
If you have the financial capacity, consider value-add strategies to increase the equity in your properties. However, make sure you have a solid financial buffer before taking on these types of projects.
6. Build a Strong Support Team
John notes the importance of having a strong team to support your property investment journey. This includes a mortgage broker, conveyancer, building inspector, and potentially a buyer’s agent.
“A good conveyancer or solicitor can make or break a deal,” John said. “You need a team that is responsive, efficient, and commercial-minded. They’ll help you navigate the process and avoid costly mistakes.”
Surround yourself with trusted professionals who can guide you through the complexities of property investment, so you make informed decisions and avoid common pitfalls.
7. Stay Disciplined and Patient
Finally, John stressed the importance of discipline and patience when building wealth through property. The property market can be cyclical, and there will be periods of stagnation or even decline. However, history has shown quality properties in prime locations tend to appreciate over the long term.
“You need to stay disciplined, patient, and focused on your long-term goals. If you do, property can be an incredibly powerful wealth-building tool.”
Stay patient, even during market downturns. Focus on your long-term goals and avoid making impulsive decisions based on short-term market fluctuations.
Building wealth through property is a proven strategy, but it requires a thoughtful and disciplined approach. “Property is a long-term game. If you buy quality assets in good locations and hold onto them, time is going to be your friend. That’s where you make substantial wealth.”
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