Although there are numerous investment strategies implemented in the market today, these strategies can be grouped into two broad categories:

• Passive (or defensive) strategies and
• Active (or offensive) strategies

Passive (defensive) strategies are where the investor puts in a standard amount of effort and therefore the investment has a standard risk profile and standard return. They also typically require a normal deposit (3-20 per cent) and normal finance (97-80 per cent), they receive natural capital growth (3-10 per cent) and a natural yield (2.5-8 per cent). These types of strategies include:

• Cash Flow vs. Growth
• Houses vs. Apartments
• New vs. Old
• High price vs. low price
• Off-the-plan
• Special purpose

Active (offensive) strategies involve the investor making a greater effort on a more “creative” type of opportunity, which therefore typically has a higher rick profile and return. These strategies usually involve a creative deposit (< 3 per cent) and a creative finance solution (>97 per cent). The rewards for this extra effort are instant capital growth (5-25 per cent) and higher yield (>8 per cent). These tyoer of strategies include:

• Renovation
• Development
• Unconventional

Your choice of which strategy to implement depends on two factors:

• The profit outcome you want to achieve (i.e. capital gains and/or positive cash flow returns)
• The needs of the person who’ll be paying you money in exchange for the use of the property.