A vital component of a property portfolio investment strategy is the careful setting of ﬁnancial objectives.
These must include total return, capital appreciation, revenue streams, net results and eventual investment values all wrapped up in a time frame deemed strategically optimal for the investor. If these have been met, then the investment, can be considered a success.
However, many investors suffer from the “should have, could have, would have” syndrome. This occurs when the investor feels that his investment did not outperform the market, leading him to depart from the initial strategy, revert to short term thinking horizons and make poor decisions regarding his portfolio.
Those who have had the greatest success possess the ability to think long term, make rational, well researched and carefully thought out decisions with the end objectives in mind and understand that every real estate industry globally will go through cycles of growth and contraction.
They don’t panic. They do not get duped into making short term decisions based on inevitable market ﬂuctuations, and they treat headlines such as oil price deflation as the catalyst for gaining a greater understanding of the underlying events that are shaping the industry and if any opportunities may conceivably arise.
“You need to be able to communicate knowledgeably with the experts. The investor fraternity is getting more knowledgeable.”
This is proactive investing. Investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your wealth accumulation objectives.
To do this, you must have some knowledge about the industry.
The old adage of “Don’t invest in anything you don’t know” applies. You need to be able to communicate knowledgeably with the experts. The investor fraternity is getting more knowledgeable.
More attention is being paid to location, quality of product and maintenance services, and the extent of completion and quality of infrastructure is now playing a big part in investor consideration.
With so much supply available, astute investors could demand, seek out and purchase the best of what was on offer, and the realization of the importance of these factors has remained a key learning for most of them.
In the post-recession era, things changed. The chase for yield along with an increase in the level of critical assessment of true values has meant that properties that offer more in way of physical product and potential rental returns are attracting the greatest attention. Investors have learnt.
The fundamental drivers of market values remain: location, product features and benefits, product quality, and demand and supply to be successful, you must have a clear understanding of what you are trying to achieve and what role your property portfolio will play. What proportion of your total investment portfolio is allocated towards property? What is your source of ﬁnance?
The more skillful you are at conceptualizing your wealth generation schematic, the greater is your likelihood of generating successful strategies to grow your wealth.
You need to identify, engage and work with a professional in the industry. As astute, skillful and knowledgeable as you may be, a reputable, experienced and client focused full service agency will greatly enhance your level of success.
Select wisely. Do not fall into the trap that the cheapest will be good enough as this is rarely the case.