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By Brett Warren

What do I do if my property investment isn’t performing?

Mistakes can be hard to admit because in doing so we have to acknowledge that we’ve somehow veered off course, and sometimes that’s a daunting prospect. 

Where does that leave us?

How long will it take to recover and get back on track?

Property Investments

Although it might be confronting, mistakes associated with a property investment worth hundreds of thousands of dollars must be honestly conceded and more importantly, acted upon as soon as they come to your attention.

Failing to rectify investment portfolio faux pars can mean risking your financial future and while that might sound alarmist, it’s the simple truth.

Of course, if you’re prepared to recognise and remedy your mistakes, the question then becomes firstly, how do I identify an issue and then, how do I make it right?

Finding fault

It can be challenging to admit a failing, but in order to achieve financial success; investors need to check their egos at the proverbial door and remove emotion from the equation.

Feelings muddy the waters of objectivity.

You need clarity when judging whether a particular property in your portfolio or even a potential deal is going sour.

Remember this is all about facts and figures.

If crunching the numbers leaves your asset wanting, it’s time to count the cost, learn the lesson and move on.

Investment lemons can come in many forms, including:

  1. A property you paid too much for is still dragging your equity position down.
  2. An underperforming location that’s not kicking the necessary capital growth goals.
  3. An asset that doesn’t align with your overall investment objectives and strategy.

The longer you hold onto this type of underachiever in the property investment game, the more damage you do to the overall health and well-being of your retirement fund.

Facing facts

Investment grade property should double in value every eight to ten years, so it can take time to recognise a property that isn’t ‘cutting the mustard’.

But once you determine a sinking ship is dragging your entire fleet of investments down with it, action should be taken as soon as possible.

As long as you continue to hold the dud investment you’re at risk of sacrificing even more money through loss:

1. Opportunity – You need access to equity as an investor in order to maximise the full financial potential of your portfolio.

Consider a $500,000 property that attracts 5 per cent growth per annum, compared to one that realises 8 per cent.

The difference over 20 years is $890,000 worth of equity, which could give you enough borrowing capacity over that time to hold at least another two to three high-growth assets in your nest egg.

Holding Time

2. Time – The more time you have up your investment sleeve, the more you reduce your risk exposure as an investor and augment your returns.

Think about the person with 30 years to build sufficient wealth with property.

They have leeway to make a few mistakes and learn valuable lessons that can be applied to take them even further on their journey.

While the investor who only has ten years before retiring really has no room for error.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.
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