Investment Strategy
The fundamental mechanics of property as an asset class. We strip away the guru rhetoric to focus on structural yield, cap rates, and market dynamics.
Yield vs. Growth Analysis
The eternal debate framed through 20 years of historical data. Understand why focusing purely on initial yield often destroys capital, and how to balance cash flow with structural capital appreciation.
Read the AnalysisLeverage Mechanics
How debt transforms property returns. A quantitative breakdown of LTV ratios, interest cover, and the point where leverage becomes toxic rather than accretive.
Understand LeverageCommercial vs. Residential
An institutional perspective on asset classes. Why commercial leases dictate value and how residential relies on localized market sentiment.
Compare ClassesThe 10-Year Hold Strategy
Why transaction costs destroy active trading strategies in property. A rigorous model proving the necessity of the decade-minimum horizon.
Examine StrategyKey Metrics to Master
| Metric | Definition | Institutional Benchmark |
|---|---|---|
| Cap Rate | NOI / Asset Value | Market specific, generally 4-8% |
| Cash-on-Cash | Pre-tax Cash Flow / Total Cash Invested | 8-12% baseline target |
| DSCR | Debt Service Coverage Ratio (NOI / Debt Service) | 1.25x absolute minimum |
Common Mistakes
- Ignoring maintenance capex in yield calculations.
- Overleveraging on the assumption of 100% occupancy.
- Confusing gross yield with net yield.
FAQ
- Is negative gearing ever a good primary strategy?
- No. Negative gearing is a tax outcome, not an investment strategy. Buying a cash-flow negative asset solely for tax relief relies entirely on speculative capital growth to offset the operating loss. If growth stalls, you are simply subsidising a tenant.
- What is the minimum viable deposit?
- While lenders allow 5-10%, institutional models suggest 20-30% equity is required to survive a 15% market correction without breaching LTV covenants or entering forced sale territory.