Ever heard of the red ocean and blue ocean strategies?
These are ideas that were initially created for the corporate world to help businesses grow more efficiently. However, we can also use these strategies and apply them to our property investing to stimulate wealth.
THE RED OCEAN STRATEGY
The red ocean theory is by far the most commonly practiced. In fact, it’s typically what people always do in real estate. That is buying a fairly inexpensive piece of real estate, maybe add some value to it and live happily ever after.
When we talk about the red ocean strategy, what we’re talking about is investing in past principles. On the other hand, we have the blue ocean strategy which is completely different but equally as important.
THE BLUE OCEAN STRATEGY
The blue ocean strategy is based on the contrarian truth. Being contrarian – particularly when it comes to investing – is an investment style in which people purposely go against the current market trends to bet on future possibilities.
Take Netflix for example. Prior to Netflix, it was commonly accepted that television shows would be released week by week, meaning the audience had to wait to find out what happened next on their favourite show.
However, Netflix took a bet that what people really wanted was to be able to binge watch episode after episode; and they were right. Years later, everything we want is on-demand and we can access full seasons streaming right at our fingertips.
Let’s bring it back to real estate and look at some mind-blowing statistics:
- Every single day, 60,000 people are born around the world
- Every single day 96,000 new properties are created
- Here in Australia, every one minute and 27 seconds there’s a new person born
- This means there’s a property produced every three minutes and 55 seconds in Australia
But here’s the real problem. By the mid-century, Australia will be a 40-million-person country – that’s only a few short decades away. So, who will really be enjoying Bondi beach when eventually there are 9 million people living in Sydney?
The contrarian truth of the blue ocean strategy is that you’re investing in the future, unlike the red ocean which bets on older but proven theories.
WHICH STRATEGY WILL PROVIDE YOU WITH MORE VALUE?
The red ocean and the blue ocean generally sit on opposite ends of a spectrum. However, this doesn’t mean that one is better than the other.
We know certain features of real estate will grow in value in the future, whether that’s walkable neighbourhoods or a rise in wellness opportunities near your property. We also know that the tried-and-true principles of investing are working for a lot of people.
As such, the best thing you can do is run both theories side by side in your property portfolio in order to create sustainable wealth.
The red and blue ocean are just the tip of the iceberg when it comes to choosing the right investment strategy. Our free property investing nights cover all the basics you need to know to get your portfolio in a position where it’s creating passive income for you.
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By Sam Saggers
