My property strategy is often classed as a long-term investor.
Just to make things clear…my philosophy is to buy and seldom sell,
rather than to buy and never sell.
Why is that?
Well, life has a funny way of bringing changes upon us, and often there
is not much we can do about it.
Similarly, our property markets change, the world of finance changes,
legislation changes, and the property cycle changes to the next phase.
That’s why I believe you should annually review your investment property
portfolio to determine how it’s performing and if you are holding a dud
which you should sell so you can move on and use your funds more effectively.
In changing market conditions like the one, we are now experiencing I
know some investors are considering selling their properties.
Before they do, though, they should ask themselves these three important
questions.
Is the
property "investment grade?"
As I mentioned above, if the property is a dud, then you should probably
sell because it’s costing you opportunities elsewhere.
You should start by asking yourself these questions:
- How has the property performed over the last few years – has it
grown in value?
- Knowing what I know now, would I buy this property again?
- Is this property likely to outperform the averages over the next
decade?
- Is there anything that I can do to improve the property to generate
a better return on investment?
If a property has failed to grow in value over a 3-4 year period, it is
likely to be an underperforming asset.
The answers to these questions should ensure that you have a top-performing property portfolio and that your money is working harder for you.
However, even if it hasn’t grown in value spectacularly that doesn’t
mean it’s a dud because perhaps the market might have been in a protracted
slowdown part of the cycle.
So, if the property is investment grade, the better strategy is for you
to ride out the downturn because of the high entry and exit costs of investing
in property.
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Jason Gwerder
Wednesday, 3 November 2021
