Get your property investments to keep building your wealth
I love sitting with clients who have invested in property for a long time — seeing how they have built tremendous wealth by acquiring property and keeping it for the long term. It always surprises me how much property escalates in value over time and how much cash flow or rental income accumulates.
But how do you ensure that your property portfolio consistently and continually builds wealth for you? Here are our top five tips for getting the best returns on your property investments:
1) LOOK AT THE CAPITAL GROWTH POTENTIAL OF YOUR PROPERTY
Most people underestimate the power of capital appreciation of a property. This side of your return on investment can often dwarf the positive cash flow generated from an investment property. So, always look at the capital growth potential.
2) CONSIDER THE CASH FLOW OF YOUR PROPERTY
You have limited resources (monthly cash flow to subsidise shortfalls), so the more significant your monthly shortfall is, the fewer properties you can own. It is, of course, great if there is no shortfall on the property and even better if there is a positive cash flow on your property. In our article, Too Broke to Buy? Rather, Break-Even!, we discuss how you can have “positive cash flow” even when you have negative cash flow.
3) KEEP VACANCY TO A MINIMUM
You want to make sure that you keep the vacancy to a minimum. Be quick to advertise your property once a tenant has cancelled the lease. In our article, How to Manage your Rental Property the Easy Way, we discuss how you can manage your property portfolio better.
4) KEEP YOUR PROPERTY IN A GOOD CONDITION
Look after your properties. Have a budget to manage the upkeep of your properties. This will ensure that your properties remain in good condition and that you can enjoy the capital growth and rental escalations on the property. In our article, To Renovate or Not to Renovate… That is the Question…, we discuss how you can keep your property in a good condition.
5) BE PATIENT
To practice patience is probably the most challenging point of all. It isn’t easy, but please don’t be obsessed with what the market (capital growth, rental escalations, vacancies, etc.) is doing now. Take a step back and look at the bigger picture.
Aristotle said, “Patience is bitter, but its fruit is sweet”.
Read the entire article in the December/January Edition of Real Estate Investor Magazine.