Future-proof your portfolio

As investors , we often get into a rut, and keep buying investment properties without re-evaluating our purchasing criteria based on the changing market and our evolving portfolios.

When evaluating your portfolio, you need to take into account where you are now and whether the initial goal you had set in terms of end income is relevant anymore. Does it perhaps need to be adjusted because of life circumstances, or a clearer vision of where your investing could lead you?

Another thing to re-evaluate is whether, by design or otherwise, the types of properties you hold are heavily weighted to one particular type (for example, units or houses) and/or concentrated in one or two areas. I have seen, time and time again, budding and seasoned property investors significantly restrict their ability to get to their income goals by either:

* Buying property continuously as they confuse ‘activity’ with ‘results’
* Sticking to one type of property without evaluating each opportunity for what it could do for the longevity of the portfolio
* Failing to re-evaluate a strategy to see whether it still makes sense in the portfolio given its present fundamentals and cash flow. There could be strategies available to you now that didn’t make sense in your early purchasing stages (for example, constructing granny flats to increase cash flow)

When you are investing, it is important to re-evaluate your portfolio, and the strategy being used, to ensure that it does work in the current market, and also to discern whether there are better ways of achieving the same result.

It’s also important not to forget about the financial structures you have in place.

With the current rumblings about investors potentially being charged a higher interest rate, and other changes being flagged to help rationalise the property market, I have taken steps to protect my portfolio’s position.

How have I done this? I have locked in my interest rates for all my properties for as long as possible, all for rates below five per cent. This helps future-proof my portfolio, especially for those properties where I don’t anticipate paying down the debt any time soon. Of course, I don’t want all of my loans to come back to variable at once, especially when they may come back to variable in a high interest rate climate, so I have staggered the timeframe.

So, to future-proof your property portfolio, you need to do the following:

* Evaluate the need to continue buying, and buy only properties pertinent to your goal
* Ensure certainty in terms of finance by locking in your rates well below the current standard variable rate, ensuring you take the goal for that particular property into account
* Don’t be afraid to sell down if it allows you to catapult forward with freed-up equity (seek expert advice first!)

Re-evaluate your strategy constantly. If it is working, don’t change for the sake of changing, but if adjusting it slightly will get you a better result, don’t hesitate.

Finally, constantly educate yourself, and don’t confuse activity with results!