What’s holding you back? Wherever you are, there is a property cycle that is moving to its next phase… and it may be a completely different scenario to when you bought your first investment property.
Did you get that first investment right?
You did your research before buying property #1 and investigated location, historical growth for the area, infrastructure, accessibility, supply and demand, and rental yields. You purchased the right property in the right area, and, after a few years, you are seeing enough capital growth to be positive with a deposit on number two. Well done!
Real estate investment is a long-term strategy designed to help you reach long-term goals.
It’s time to review the performance of your current property portfolio, albeit a portfolio of one. Yes, it’s still a good performer.
Back to your research again, to find the type of property where the people are still going to be able to afford to buy and rent, where they’re going to have good jobs, where they’re going to have rising wages.
Check individual performance
Think of a property portfolio as a number of investments each having its own function. For example, how much rental income should a property bring in to ensure your portfolio is a good performer that allows for further growth? How do you expect each property needs to function in terms of capital growth in an anticipated timeframe.
Don’t feed the weeds
The worst thing about an underperforming property is that it can stall your forward momentum. But what if it is your only property? Be strategic. Selling that first investment and starting again is not a backwards move if it allows you to purchase another property that better performs to the goals you’ve set for your financial future.
- Re-assess your current portfolio.
- Consider spending on improvements.
- Check the asset that may be a high-profit sale.
- Critically asses your debt management plan.
- Understand that while debt is leverage, growing portfolios and reducing debts make for good company.
- Watch for interest rate rises, which can reduce your return.
- Rationalise – consider selling underperforming assets.
- Aim to be cash-ready to take advantage of best investment buys.
- Buy investment properties with solvable problems.
- Choose markets where rental properties are in short supply/high demand.
- Pay good attention to the ‘what ifs’
If you wish to build your investment property portfolio, you must have a strategic property plan that works for you, but you don’t have to go it alone. Invest in the expertise of others, the financial people and the real estate agents, to make your property investments work for you. Get that team of advisors on your side.