Times are changing at an ever-faster pace in this technological age. And our property markets are no exception, as the fundamentals that underpin and drive our inherent relationship with housing and in turn, its value, undergo a significant transition.
The question for property investors is; how do you adapt, prepare and evolve your portfolio accordingly? Here are five ways you can equip yourself for success in this new investment age…
Accumulate or alleviate.
Use this time of cheap credit as an opportunity to either:
a. Accumulate – if you’re young and need to increase your asset base to prepare for retirement, or;
b. Alleviate – if you happen to be approaching retirement and need to transition your portfolio from geared to income producing.
Favourably low interest rates make this the perfect time to think ahead and get ahead financially.
Smart property investors have recognised this early on, and pro-actively worked to reduce their debt exposure and improve cashflow, rather than complacently letting this low rate opportunity pass them by or worse still, leveraging to the eyeballs just because they can.
Many have used the last two years of successive rate cuts and cheap credit to reduce their non-tax deductible mortgage debt, which can be as simple as maintaining the same monthly repayments when discounts are applied by your lender, and establish cashflow buffers.
Review and take action.
Tracking the progress of your property portfolio to get an insight as to how well your financial strategy is faring, and whether or not it needs some tweaking, is essential if you hope to successfully create long-term wealth with real estate.
While none of us like to admit that we may have made an embarrassing faux par with a property purchase or two in the past, now is a particularly good time to consider offloading under performing assets.
Don’t be afraid to acknowledge your mistakes. Markets are moving at a great pace in some locations, so you could manage to achieve a good price, while getting rid of dead weight.
Plan, plan and plan some more.
It’s easy to contentedly rest on one’s laurels given the ongoing, housing credit status quo. But remember, this too shall pass.
So it’s important that you have the right strategies in place to comfortably transition into a new stage of the cycle, which may not be so favourable for investors chasing capital.
Make sure you undertake the necessary ‘worse case scenario’ number crunching, including cashflow forecasts around higher interest rates and increased holding costs, etc.
If you’re struggling to find wiggle room between your incomings and outgoings at the moment, then you need to seriously review your budget so you don’t get caught with your pants down when rates start to climb once more.
With so much constant media attention around Australia’s housing markets right now, along with a wealth of expert commentary saturating the Internet, ignorance is no longer an excuse.
In the past, many property owners lucked out and ended up sitting on (or in) substantial equity due to a (accidentally) well-selected family home.
Things are very different now though and optimal asset selection is becoming increasingly critical – not just for property investors, but also those looking for a place to live.
Today’s investors need to immerse themselves in the markets and be pro-active when it comes to understanding the cultural and demographic shifts currently occurring in Australia.
Or you can consult a professional to gain better insight into the types of assets that will endure future market ups and downs, whilst continuing to outperform the averages.
Don’t let it phase you.
While the current constant stream of property related media coverage and commentary provides a great resource in some respects, it can also work to distract property investors, luring them into speculative ventures that can bring all of that hard work undone in an instant.
With the opportunities come the opportunists looking to make a quick buck.
Now is the time to ensure you have a fail proof plan and a back up contingency in place, to ensure you don’t lose sight of your destination and veer off track.
If you would like to future proof your property investment portfolio, why not connect with us here at Trilogy? Our experienced team can assist in strengthening your current investment position and identifying any opportunities to optimise cashflow and consolidate long-term gains. Click here to connect with us today.