How do you recover from a bad property investment?
We’ve all had one defining experience in our life that’s put us off doing something again. It might have been back as far as school days or in our more recent past, but enough to make us think it wasn’t worth the effort.
Unfortunately, when it comes to residential investment, this can can hold us back from building real wealth. Once burnt, it’s hard for people to go down that path again. However, I would encourage you to reassess where things went wrong and look at how to prevent similar issues from happening again.
Let’s take a look at some of the pitfalls that can easily be avoided with the right sort of risk mitigation strategies in place.
You listened to the guy next door
You know Doctor Google? The one you consult when you’ve got a rash on your arm but no time for a medical appointment? That’s just as effective as listening to the person next door’s tips on property investment (unless of course they’re a professional, but that’s another story!). This time around you bought a house around the corner that’s never been quite right and you’ve got it on the market now hoping for a quick sale.
Finding the right investment takes thorough research in terms of what suits your financial goals, budget and timeframe. You need to talk to a residential specialist such as myself to make sure the property ticks all the right boxes.
You bought out of fear
The apartment seemed to match all your criteria on paper, but there was something not quite right. You couldn’t get to sleep at night for worrying, but if you didn’t invest right then and there you stood to lose hundreds of thousands of dollars. Turns out, your instincts were spot on – the property was a complete waste of time and you came out of it in a worse position than before.
Unfortunately this is more common than you’d think and it’s why I stress to my clients that there will ALWAYS be another investment property. Even though something may appear to be perfect, if the timing isn’t right for you, stand back and wait until it is – there’s no point moving forward with regrets.
You were forced to sell the property at a loss
Everything happened at once. First you had trouble finding tenants, then you lost your job. It was hard making ends meet and you looked around at your assets, when bingo! You put your investment property on the market. Regrettably, you couldn’t get the price you wanted and ended up selling at a loss.
This is where your initial purchasing strategy should have come into play. Had you set up an appropriate cash buffer (which is non-negotiable for my clients as an essential risk mitigation tool) you would have been covered in case of financial emergency. This sum of 3, 6, 9 or 12 months’ worth of expenses would have been sitting in an interest bearing account waiting for this very situation.
Get the structure right the second time around, then set and forget
These are just a few examples of problems our clients have had before they came to me. At Smarter Property Investing our clients succeed because we get the work done at the planning end to make sure the property is right, the structure is sound and our clients are standing on firm financial ground.
Property investment isn’t meant to place a further strain on your economic wellbeing. It’s a vehicle to build wealth from solid, tangible assets that will move you forward in the right direction with the right strategies in place.
Have you had investments turn sour? Has it put you off or did you pick yourself up and start again? Please let me know your thoughts in the comments.
As always, if you have any questions, leave your comment below.
Until next time,
From the desk of Christine.