Even now, it seems to be a common investment philosophy that buying and holding, and never selling, is the best way to make money from the real estate game.

It’s relatively easy, passive investment. Over quite some time, historical medians indicate that average values will increase in cycles that work out to roughly 7% per year. When using substantial amounts of leverage and reasonable yields, this allows for some pretty good returns.

Assuming, of course, that you do get your 7% every year.

In many areas, average values have been fairly level – or even backwards in say, parts of Sydney – over the last few years before the first home owner grant has done it’s magic for 2009. In that scenario, we’re seeing many people negatively gearing without the capital growth to compensate.

Robert Kiyosaki has spoken about the dangers of negative gearing in the hope of seeing future gains. In many ways, with an uncertain financial environment at the moment, I tend to agree.

Perhaps it’s because I like to take risks. Perhaps, it’s because I’m amongst the “want-it-and-want-it-NOW” generation. Regardless, I am a fan of investors being proactive with their investments, rather than reactive. Creating value in a flat, falling or rising market, instead of waiting for the market to move for you. This is often cited as one of the main reasons to invest in bricks and mortar instead of shares; yet, we see many investors reluctant to do so.

And, we also see many people who are afraid to move money from a non-performing asset into something that will get a better return. As with most traditional concepts, we like to question, to ask ‘why?’

Often, the response can be as fickle as a simple reluctance to pay tax, stamp duty or agent commissions. Oddly, these are simply costs of doing business.

Like any other such decision, it’s all a numbers game. If the deal stacks up whilst standing still, then all the better. If it doesn’t, then these costs should be taken into account and new opportunities analysed and compared until that decision can be reached with confidence.

Having a strategy that’s built with the intention of creating a win, rather than waiting for the market to deliver you one on a platter, makes a lot more sense to me. Especially when the alternative is simply losing money whilst you’re waiting…