Sensible property investment strategies in troubled economic times

In theory property investment is relatively straightforward, find a good value asset, maximise income and sell for a profit further down the line. It is a shame that it is not that straightforward in real life especially during these troubled economic times. However, there are a number of sensible property investment strategies you can undertake to protect your capital and reduce your downside.

High yielding assets

It is fair to say that all property prices will struggle if the economy takes a downturn. This would obviously impact expenditure in the region, relative wealth and ultimately employment. The fewer people looking for rental properties the less competition which limits any price increases and may actually place pressure on the downside. However, if you acquire high yielding assets with long-term tenants then the downside in times of struggling economies will be limited.

This is the flipside of the capital appreciation coin because these assets tend not to appreciate in value as quickly as others in the good times.

Selling properties on overstretched valuations

If you have property in a particular region or market and you see that prices are becoming overstretched, there is nothing wrong in taking a profit. Like an elastic band, property markets do on a regular basis become overstretched and they will hit a point when they will turn fairly sharply. If you are able to sell your property before this critical point then you can sit back, with money in the bank, keeping your powder dry for the next opportunity.

There may be occasions where you mistime a sale although the day it is wrong to take a profit is the day when hell freezes over.

No need to reinvest immediately

While there will always be opportunities to acquire assets at “attractive levels” it is worth noting that there is no need to reinvest sales proceeds immediately. Sit back, review the markets and maximise your position because when distressed assets appear, very often the seller is after a quick sale and in need of cash. If you have cash on deposit and can act relatively speedily there is every chance that you can pick up some good value assets along the way.

While many people frown upon those acquiring assets from distressed sellers, let’s not forget it also helps the seller to raise funds very quickly.

Enjoy the fruits of your labour

It is all good and well building up a large property portfolio, leveraging your assets to acquire more and looking to the future with anticipation, but when do you get time to enjoy the fruits of your labour? Too many property investors will simply churn their money from one asset to the other in the hope they can build it up on a long-term basis. Sometimes it is good to take some money out of your business, out of your investment portfolio and enjoy your hard earned profits.

We’re not suggesting buying a yacht, or splashing out on a new car, but enjoying the fruits of your labour from property investment will ultimately incentivise you in the future. We all like the feel of money, the idea of security and sometimes it takes a withdrawal from your property portfolio to realise how life changing a successful long-term investment portfolio can be.

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