5 Tips For Property Investors To Combat COVID-19
Property investors should prepare for a bumpy ride over the months ahead as residential property across Australia is drawn into the eye of the COVID-19 storm.
It's hard to believe that just a few months ago the growth drivers in many independent property markets around Australia were presenting fantastic opportunities for property investors in 2020. Even as recently as just a few weeks ago this confidence was still largely unaffected across many regions nationally. Now the dark clouds of the COVID-19 storm are certainly resulting in a sudden drop of confidence in the market as Buyers and Sellers become uncertain about the potential affects the economic impacts will have, and how long it will take to recover.
An investors mindset will certainly be tested in this unprecedented time. Some property investors will aim to bunker down and just focus on 'surviving' the COVID-19 crisis, whilst other investors will aim to 'thrive'. Yes, many investors will see this crisis as an ideal window to prepare for incredible investment opportunities across some of Australia's strongest and least affected markets.
How you react next will be very important!
Here's my top 5 tips for navigating this unsettling period:
1: Don't Panic
This storm will pass! It's very natural for investors to panic in the midst of a crisis. The impact of fear is very evident in the Stock Market with liquid assets like shares being offloaded quickly, dramatically affecting values overnight. Thankfully, the property market is very different. Property is far less liquid which allows investors to make a more calculated decision around selling a property.
Yes, property values may temporarily fall, but many analysts currently expect the property market to bounce back fairly quickly. In my opinion a better option would be for investors to hold their properties and ride this storm out. This might be an ideal time to review your position and adjust your investment strategy. A great first step would be to conduct a full revision of your mortgages. This may be the ideal time to refinance your loans potentially saving you thousands each month in loan repayments. If you feel particularly vulnerable financially please touch base with your lender to discuss a potential mortgage holiday to assist you through this challenging time. Please remember this pain is short term and we are all in it together, so don't feel uncomfortable requesting help if needed.
2: Support Your Tenant
If you are a Landlord please be proactive. I encourage you to communicate regularly with your property manager so you understand the stress levels your tenant may be experiencing. If your tenant is dramatically affected your property manager will be able to help you understand this situation, plus the general rental climate in that market. It may be a much smarter alternative to reduce rent rather than have them vacate only to discover that you can't replace a tenant for a long period of time, even at a reduced rental amount.
Your tenants are not going to want to move at a time like this leaving financial stress as the only likely reason they need to move. Please keep in regular contact with your property manager so you can show your support where possible. Landlords await a formal government announcement around how property investors may be compensated if Tenants go into default on residential leases. Until we understand this potential compensation we should all do our best to support our fellow Australians.
3: Bunker Down
We don't know how long it will take for this storm to pass and whilst we can 'hope for the best' I encourage you to 'prepare for the worst'.
Investors should take immediate steps to avoid any unnecessary spending. While this window of time may seem ideal to renovate or improve a property, I'd encourage you to avoid tapping into your cash reserves if it could leave you vulnerable six months down the road. This is a much better time to tidy up all those loose ends that we are often too busy to do due to our usually hectic lifestyles. Over the coming months we will all need to invest in our mental health and the mental health of those around us. Our finances will play a major role in our mindset. Early adjustments around the way we earn income, immediate removal of all unnecessary expenses, and recognising the importance of our physical and mental health by maintaining some focus on healthy habits will help investors maintain strong foundations and allow us to rebound quicker when the storm passes.
4: Invest In You
Many Australians will see the next few months as an ideal time to slouch on the couch and soak up countless hours of Netflix. Whilst this extra down time we are all experiencing due to social distancing measures will provide an obvious opportunity to spoil ourselves with many of the little personal pleasures we are usually too busy to find time for, I strongly encourage you to commit to also investing in your personal growth.
If you've always loved the idea of becoming a highly successful property investor this could be the ideal window of time to gain those skills. A commitment to achieve growth through this period will play a major role in setting an expectation of you targeting a big positive outcome rather than just surviving. Your positive mindset and a constant small investment of time for growth may play a much bigger role within your family environment than you can possibly imagine, setting a very positive tone for all those around you.
5: Prepare To Thrive
Smart investors understand that this is not a time to be reckless, but it is a time to prepare. The Australian property market has a long history of strong performance in times of crisis. Some of the biggests 'blood baths' experienced by the Stock markets globally over the past 40 years has seen the Australian property market rebound into an explosive period of growth. Many analysts have used these past experiences to describe how investors historically 'race back to the security of bricks and mortar' when a financial crisis creates uncertainty in the market.
It's also expected that whilst our borders are currently closed, Australia could emerge from this crisis as one of the safest countries. If we continue to flatten the COVID-19 curve and maintain a very low percentage of deaths when compared to most other nations, this 'safe zone' perception will multiple quickly. This could see a huge tourism and immigration boom when this crisis ends. Regardless of immigration levels, Australian investors also have the ability to identify the new emerging markets that will explode with growth over the next 5 years thanks to more than 5 Million baby boomers downsizing and relocating to regions poised to capitalise on Australia's biggest ever movement of wealth.
Remember, this storm will pass!
The only question is, will you be ready to capitalise?
Astute investors will use this time to prepare. They will re-evaluate their goals, understand their ability to purchase (test their finance capacity), and invest in their knowledge to ensure they capitalise on the rebound rather then getting caught up in the masses reentering the market after confidence returns.
The BIG WEALTH SHIFT report
If you haven't already downloaded my latest National BIG WEALTH SHIFT Report, here's the link.
This Report outlines the biggest single movement of wealth we have ever witnessed in Australia, and how property investors can profit.
COVID-19 Property Investor Update
Helping Property Investors stay updated on the risks and opportunities across the national property market.
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