Property Investing Strategy – Part 2

Buy and Hold for Capital Growth

  • Aim is to hold property that grows in value over time
  • Example
    • Property purchased in Sep 2019 for clients in Cannon Hill, Brisbane
    • Purchase price $730,000
    • Rental yield was approx 4.4% (based on 100%LVR) so would have been negatively geared 
    • No renovations or alterations undertaken
    • Current estimated value is $1.1m
    • $370,000 increase in value (50%) in 3 years
  • Timing here was very fortunate as purchased just a couple of years prior to huge growth cycle
  • Expectations around growth – what is realistic, what is good?  This example is not indicative of every purchase.
  • Aiming for areas that have high capital growth
  • Often negatively geared

Why use this strategy?

  • Access equity to purchase another investment
  • Rent- investors can sell to help them buy an upgraded home they could otherwise afford 
  • Park money and earn more than you might if you left money in the bank 
  • The biggest reason is to build wealth to support or supplement retirement. 
    • 3 ways to do that
      • Build equity sell some down
      • Pay off some and live off of rental income (?difficult)
      • Sell all and put funds into another investment vehicle that supports retirement 
  • Financial planners want to see $1.2 million nett in cash for retirement if your aim is to earn circa $60K pa in retirement

How is high growth buy and hold achieved

  • Comes down to area selection 
  • Asset selection 
  • Meeting the growth fundamentals for the type of property you are purchasing. 
  • Criteria for a house will be different to a townhouse, apartments etc 

How to maximise asset selection for growth


  • Infrastructure projects – transport, healthcare, university, community facilities, large shopping chains (e.g. bunnings)
  • Transport corridors
  • School catchments
  • Population growth
  • Shopping precincts closeby
  • Ripple suburbs – income growth, gentrification, cafe culture
  • Historic Growth – discuss
  • Water


  • Features that suit the demographic
  • Land size
  • Yard
  • Kitchen
  • Outdoor entertaining
  • Good floorplan
  • Light and bright
  • Low maintenance – flat block, simple garden
  • Well maintained
  • Owner occupier and rental appeal

Pros and Cons of this strategy – buy and hold for Capital Growth

  • Pros
    • Builds wealth 
    • With a big upswing in growth can make a lot of money
    • Losses offset taxable income
    • Capital growth has a compounding effect, so the sooner you get into the market the more gains you will enjoy 
    • Excellent passive strategy (Less moving parts. Less project mgt) 
    • Accessible to most people (ie – developing might not be for some people, whereas this is) 
    • Types of properties and areas that are typical for this strategy are usually acceptable by banks with 90-95% LVRS often possible depending on the individuals circumstances 
    • If held long enough, very forgiving
    • Lower risk (when fundamentals followed) than other strategies 
    • SMSF friendly 
  • Cons
    • Losing money so need to be able to sustain that (ie require spare cash to be able to cover the shortfall between the rent and outgoings) 
    • Limited capacity to repeat depending on available disposable income
    • Interest rate hikes can make holding properties difficult
    • Forecast growth is not guaranteed, based on speculation

What’s next

In the upcoming episode we’ll look at positive cashflow property.