Within a matter of weeks, we have entered a new property paradigm. What was the norm earlier in the year is no longer. Basic economic principles that had been the pillars of property investing for years are now subject to disruption like never before.
Below, I identify several concepts that will allow you to survive, if only keep your head above water, during these brave new times.
1. Make Irrational Decisions
Don’t panic, this is not the first time that property has been affected adversely by factors outside of our control. Property is a long term hold and if you have been financially prudent over the years and put a bit of funds aside for a rainy day (or a global pandemic) you should be able to weather this storm.
If not, then you will have to be creative and utilise some of the life lines that financial institutions are offering such as mortgage-free repayment periods or other means.
2. Ignore Sound Advice
What is sound financial advise? Well, to me, it’s what is going to allow me to continue to achieve my goal of a debt free property if I am looking for property appreciation or potentially owner/occupy at the end of the mortgage.
There are a slew of “advisors” who will offer you their advice. Ensure that they are qualified to do so and have your best interest at heart rather than selling a product that they, in turn, will receive a commission, trailer or other benefit from.
3. Lose Your Tenant
We have recently seen a lot of owners who are unwilling to work with their tenants and therefore lost them. This is not the time. Yesterday I had a meeting between a landlord and a tenant and after a pleasantly surprising 15 minutes of civility, the owner agreed to decrease the rent by 50% for the next 3 months and the tenant agreed to sign a new 3-year lease.
These agreements are symbiotic and without one the other rarely survives. It was a pleasure to be the conduit in this situation and allow the tenant’s business to ‘hibernate’ during a period of no income and they are reliant on government subsidies.
The owner’s income was based upon the rental income, but given the current situation, understood the necessity to forgo 100% of the rent for a short time to minimise future exposure.
4. Throw Good $$ After Bad
But my property needs maintenance? Fix it up, spend $$ on those leaky taps, low pressure showers and basic necessities for your tenant. DON’T refurbish the kitchen and bathroom right now, unless absolutely necessary to ensure that your tenant’s quality of life is maintained.
If you have been financially astute during your stewardship of your property, then you will have invested in upgrades along the way and not have many maintenance needs. Yes, hindsight is 20/20, but if traded prior gain for current pain then this is going to be a hard lesson for you.
5. Be a Sheep
There are many distressed property owners at the moment. We work with them daily and attempt to ensure them that this is only temporary, however, the property investment model has fundamentally changed.
What has worked in the past, may not work in the future. Just because other people are jumping ship doesn’t mean that you have to. If you have been caught out by negative gearing, a lost tenant, increased expenses, know that you have options.
If you had a successful philosophy, antidote, or method that worked, please share. We are all in this together. Now, more than ever we need each other’s experience and advice to survive the new Property Paradigm.
We have been doing this a long time and understand the trials and tribulations of property investing. We have a wealth of experience in this area and would be happy to assist with your property journey.
