Year-end review for your property investments

While you should always keep an eye on developments in property markets it is vital that you carry out an end of year review of your property investments. To do this you must review performance and valuations with no emotion and no bias towards any particular assets. You need to be honest in your review and ensure that you carry out any required changes. So, what should the year-end review for your property investments entail?

Short, medium and long-term performance

It is very dangerous to look at a short period to get an impression of the long-term potential for your property assets. You also need to take into account the medium and long-term performance as well as the prospects for the future. Even though many property investors will have an array of assets they have held since “day one” this does not mean you should hold them forever and a day. This is where you need to remember that trends change and what looked good value in years gone by may not be as good value in the future.

This is an opportune time to mention that all performance figures should be relative to the property market, economies and perhaps stock markets to give you a benchmark. If the local property market in which you are invested fell by 20% but your assets only fell by 10% then in reality you have outperformed by 10% in real terms. This is something which many people fail to appreciate.

Looking to the future of your property investments

There are many different ways to approach the future structure of your property investments. Some people take a top-down approach where they look at the worldwide economy, individual country economies, regional economies and then regional property markets. This can be time-consuming but if you find a situation where connected economies are set to do very well then this will be reflected by regional property market performance. However, this is not the only way to identify potentially lucrative property markets of the future.

Some people tend to go for a bottom-line approach whereby they will look at local property markets and perhaps not take as much notice of economic data. There are special situations emerging each and every day around the world where there are potential bargains which you could liquidate in the short, medium and longer term for large gains. In reality it can be difficult to invest in property with any great belief unless you have confidence in the underlying and connected economies.

Plan of attack

Once you have reviewed the performance of your property assets, looked at options for the future and economic indicators, it is time to put together a plan of attack. There will be situations where there is nothing for you to do in the short term but there may be situations where there is significant restructuring required. This is where you need to put together your “plan of attack” and ensure that you follow through with your decisions.

When invested in property you will find it is very easy to take a profit but often very difficult to admit you made a mistake and take a loss. If a property is underperforming in the short, medium and longer term then perhaps those funds could be better invested elsewhere? Take emotion out of the situation, put together a short, medium and long-term plan of attack and do it. The property market is filled with investors who had great ideas, which made perfect sense, but failed to follow through with their plans. Many will tell you that their property performance suffered because of inactivity even though they had formulated a perfectly legitimate and sensible plan of attack.

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