A key plank in any investor’s strategy is thinking long-term about their property portfolio.
While the economy has high and low cycles, a successful landlord will always stay the course, confident that real estate will continue to produce capital growth while benefiting from rental income and a few tax breaks.
For potential property investors, or those looking at expanding their current portfolio, it’s important to remember the financial benefits are not dictated solely by the amount of rent you generate.
With mortgage costs possibly peaking, many investors are seeking properties believing they can gain capital growth once the market rebounds in the months ahead due to falling mortgage costs.
So, they’d not be concerned by data that says rents have decreased, falling to an average of $1,937-a-month from a high of $2,053 in August.
Some cities that have seen falls include Austin, New Orleans and Pheonix. According to rent.com, rents in these cities have dipped in mid-single digits year-on-year. Most other centers have either dropped marginally or stayed at a similar level.
Interestingly, a new Gallup poll has found that Americans (34%) favor property investment over any alternative, including stocks and bonds, gold, and savings accounts.
You may find this list of approaches to shaping a property investment strategy helpful.
Don’t rush
Property investment requires a balanced approach, realistic expectations and the willingness to adapt your strategies based on market conditions. For example, when prices peaked in 2021, many sold to owner-occupiers at big profits. Now, they’re back.
Spice of life
Variety is the spice of life. And that’s true for your portfolio, too. Spread risk across different types of properties and geographic locations.
The numbers
Investment is not about buying properties you like but purchasing those that meet your financial goals. Work with a great accountant or financial planner to help establish a budget for each purchase.
Cost factor
Remember, there’s more to being a landlord than making a purchase and receiving rent. Ongoing expenses include property taxes, insurance, maintenance and management fees.
Mitigate risk
Consider risk management strategies, such as insurance coverage. Don’t get caught out by liability claims or natural disasters.
Partner up
Use a favorite agent consistently, and stay updated on local and national real estate trends and regulatory changes that may impact your portfolio.
NOTE: The information in this article is general in nature and provided as a market overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.