With many of the markets coming off their rising trajectories and starting to correct, many investors are faced with some difficult decisions.
Contributors to stress and anxiety can come from many directions including Market fluctuations, periods of rental vacancy, increase to outgoings, unexpected maintenance issues and changes to interest rates.
Whilst never enjoyable and such stress and anxiety can take the gloss off being a successful investor, the above issues are part and parcel of property as an asset class and more importantly you will never be the only one in such a position. In fact, these situations are commonplace around Australia as the nature of investing in Australian property means having multiple markets performing or under performing at any one time.
If you have a sound portfolio, one which has properties with the correct percentages of Growth and Yield, then you may simply need a short-term strategy to ride out the storm.
We have a banking system that requires lending institutions to offer flexible payment operations during periods of financial hardship. Other service providers such as Local councils, water and utility providers will provide debt payment plans.
Without a doubt, the best approach is to be pro-active, get on the front foot and approach the bank or service provider early. Contacting them before you fall too far behind will show them you are of good faith and are prepared to clear the debts, but simply need some flexibility to manage the cash flow.
My tips for dealing with financial stress are:
- Make a list of all the debt you owe. Find out what payments are necessary to bring your accounts up to date, so you have a clear position on what you need to negotiate.
- Get real and assess how long your position will last. Do you require three months, six months or 12 months of relief? Do you need to plan for longer?
- Are there any other factors affecting you? Health, employment or divorce?
- Formalise a budget to gain a clear understanding about what income you have to work with, what commitments can be made, and which need to be deferred.
Financial arrangements with banks, financiers and creditors can include:
- Postponed or deferred payments
- Loan restructuring
- Interest-only repayments
- Temporary overdrafts or lines of credit
- Entering into refinancing or debt consolidation arrangements
What options do you have if the above fails?
Owning investment property provides you with options, it may be that selling off a part of the portfolio is the only answer, and if this is the case, conducting a portfolio review, identifying which property if sold will provide a solution with the lowest impact to the overall portfolio will be important. Seeking the advice of your financial planner, accountant and property adviser is recommended.
I want to encourage you to continue to activate your prosperity, pushing through a challenging period will help prepare you for the next one, if someone told you that owing property was a breeze, they lied, and you should never see them again.
The important message here is find a solution that ensures your portfolio survives and don’t be afraid to ask for help. Most importantly, remain positive and stay focussed on the reason you committed to property as a wealth creation tool.
Steve Purcell is located at our Head office and is the licensee of Launch Properties. He holds a PSBA License, is a licensed Auctioneer and holds a Master’s Degree in Business. Steve brings an extraordinary depth of hands on experience to the role, including twenty years in commercial and residential construction, followed by ten years in residential Real Estate sales and property development. This unique blend enables Steve to provide advice on selected developers, to ensure they are providing functional, quality assets with high quality finishes to mitigate potential sector risks to our clients. Become a client of Steve’s and get access to RP Data suburb reports, market valuations and advocacy options.
To speak with a property expert, call our team on (02) 9009 2428 or email: email@example.com