It is astonishing to me that so many investors talk about how man properties they own rather than how well their portfolios are performing. This kind of autopilot investing without context can be detrimental. The coming holiday season is as good as any for you to give your portfolio a much needed health check simply because sometimes in life, more is not necessary better. Here are some questions to get you started:
1. What is your overall investment goal?
Why are you investing in properties in the first place? Are you investing for cash-flow or capital gain? Are you investing for a better quality of life in five years? Ten years? Or twenty years? Without knowing clearly where you are heading any investment strategy would be haphazard at best. Reaffirming your overall financial goal can help you visualise where you are at and how your portfolio is performing for you.
2. What positive steps can you make to attain this goal?
Review your portfolio activities in the last 12 months. Have you bought any new properties? Have you added value by renovating or developing? Do you action strict rent arrear and rent increase protocols to maximise your cash return on each property? I will always remember Kesh Maharaj telling a room full of APIA investors how income from property investment is anything but passive. Truly successful investors are anything but stagnant. Consider this a performance review of yourself as and investor and work out which areas you can improve on in the coming year.
3. How well do you know your properties?
4. Which are the stars and which are the slackers?
Now that you have a clear direction for your investment strategies and got to know your properties, it is time to look critically at each and every single one of your properties. Which ones are propelling you towards your ultimate financial goal and which ones are holding you back? Are any of your properties suffering from persistent high vacancy? Giving you a poor cash flow or uninspiring capital growth? These are your under-performers. Start building a strategy to either sell these properties or make changes to them to improve their performance. The APIA 10 Year Wealth Projection Calculator is a good starting point.
5. How compatible is your portfolio to your lifestyle?
We all go through various changes in life and your property portfolio can either add to or take away from your current and upcoming lifestyle. When you started investing, you may had been single, footloose and fancy-free. The investment strategy and portfolio style that suited you then would not necessarily be the best for you current lifestyle as a father of two with a third baby on the way. You have have changed jobs or combined your finances with a new partner. All of these changes have implications to your savings and disposable income capacity not to mention your cash reserve to remain active on the property market.
Additionally changing circumstances in your life may also require a reexamination of the way your portfolio is structured. To stay on top of maximising tax savings, book an appointment with your accountant in the new year to discuss changes in your life.
6. Is it time for some TLC?
Regular maintenance, repairs, and even moderate renovations are vitally important for your property to command a high rental return. While these works are easy to keep on top of when the property is being managed full time, for many part-time landlords, they can slowly build up into an insurmountable mess. Schedule in a property inspection during the Christmas downtime and take stock of what needs to be repaired or maintained.
7. Are you paying too much?
8. Do you have a safety net to fall back on?
9. Are you renting to the best people out there?
10. Are you up-to-date?