While there is nothing wrong with having a focus, an endgame and the exit strategy in mind, the key to successful property investment is a flexible strategy. This may mean flexibility on purchase price, flexibility on area, type of property or perhaps flexibility on your target sale price. We all have this idea of a perfect property in our minds, the location, the look and the price, but for all of these pieces of the jigsaw to fall into place at the same time you would need a miracle.
Markets change
If you believe that a particular market has good potential for the future, or perhaps you are looking to exit an existing property asset, you need to appreciate that markets do change on an ongoing basis. When buying a property the longer you leave it the more potential for an increased premium, if the market is moving higher, and the longer you put off selling a property when the market has turned the more potential for a reduced price. Have a target price in mind but do not be blinkered into thinking that this is the be all and end all.
Your situation will change
In a perfect world those looking to invest in property would use funds which are not required in the short to medium term therefore allowing them to look at any investment on a long-term basis. Unfortunately, not only can markets change but our own personal circumstances can change and sometimes you will need to readjust your strategy and your targets. It is all good and well having a profitable property asset in your portfolio but what if you are struggling personally from a financial point of view and incurring interest charges on debts?
You may have to sell your property “early”, you may need to take a loss to re-adjust your personal finances because not only do you need to take into account your property portfolio but your personal circumstances. The chances are when you are desperate to sell to cover any personal issues the market will have turned and you may have difficulty selling. If you need to sell, for whatever reason, do not try to play the markets and make yourself a few extra pounds. The chances are it will turn against you!
Look outside of your local area
The idea of sticking with assets and markets which you know well is well-founded but the age of the Internet has brought information into our homes regarding markets which we would never have touched in years gone by. It is therefore beneficial to you if you can look outside of your local area, your comfort zone, and slowly but surely begin to build up an understanding of other markets. Whether or not you invest in these markets in the longer term is immaterial, because the experience gained in following other markets will certainly help you in the future.
Conclusion
We all have an idea of the perfect property investment in our minds, the place, the price, the look and the potential for long-term capital growth. However, not only do we need to be flexible with regards to our investment strategies and our target markets/assets but we also need to take into account our underlying financial position. Flexibility is the name of the game because markets change quickly, many people have been left high and dry in the past and you need to react to changing situations.
The rule of thumb that property investment should be seen as a long-term project still stands although there may well be issues along the way which you need to address and possibly act upon.