Weathering The Storm Of A Market Downturn
If you have followed property prices around Australia even for a while you know that the market has its up and it’s down. But… this is easy to forget when all you see in the media are articles about the market crashing, negative growth cycles and real-life examples showcasing poor your families losing 100’s of 1000’s of dollars overnight in real estate deals gone sour.
It’s times like this you remember the price your parents purchased their first house in the “burbs” for to understand that property is indeed a true investment … even though it experiences downturn cycles multiple times over the life of a property.
Reserve Bank data supports this notion, showing that in the 30 years to 2015 house prices all around Australia increased by over 7 per cent per year. During this period there were slowdown times, just like we’re experiencing now, but in the end, everything still went upwards.
Does that mean as an investor you just sit tight and weather the storm of a downturn?
Well, you could, but in this type of holding pattern you may be missing out on ways to maximize your position. Whether you are an advanced investor with multiple properties under your belt or you are at the start of your journey and have just excitedly secured your very first investment, below are a couple of options for you to consider to be an active investor no matter where in the cycle the market is at:
For those with a couple of properties under your belt now is the time to do a portfolio assessment:
- Have you conducted a rental review on your properties over the last 12 months?
- Have you interviewed your property manager to keep abreast of the changing demographics in your rental market? It may be a changing market whereby a certain inclusion in a house is more sought after and will return additional rent.
- Likewise, if the area is changing there may be new requests which you could include in your investment, like an outside entertainment area, which can easily be taken care of, increasing the value of your property.
Furthermore, and these points also ring true for the “newbie’s”:
- Call the bank to ensure you have the best interest rate available.
- Fix your rates, or part fix your rates to give yourself the sleep at night factor.
- Make sure you have your buffer in place for unforeseen circumstances.
- Make sure your tax deductions are up to date with a new depreciation schedule.
- Follow up that periodic inspections are carried out to keep your investment in top shape.
So in a downturn ask yourself… what else is available that I can action right now? And watch your portfolio outperform those investors who are “weathering the storm”.