A staggering 81% of the residential property investment sector is impacted by what I like to call, portfolio stagnation. What does this mean in simple language? The majority of the sector consists of investors who own between 1 and 3 properties and are never able to progress beyond this portfolio size.
I hear time and time again from disheartened and disgruntled property investors that what they signed up for, isn’t their reality. They bought into the notion of fast-tracked retirement or living off this thing called passive income. (PASSIVE INCOME, a controversial topic for another day). The facts remain, property investment is a tangible and attractive asset class for a number of reasons, however, it should not be seen as the silver bullet to your investment objectives.
In my opinion there are a few core reasons why investors reach the point of stagnation:
- They believe that capital appreciation is a certainty;
- They believe that holding properties, even non-performing ones, will always pay off in the long run;
- They don’t understand the importance of leverage;
- And lastly, the realisation that in order to make any sizable income from property, scale is the order of the day.
Now don’t get me wrong, there are an abundance of success stories everywhere you look, especially online, however, these should be viewed as the exception, not the norm. So at this point you may be asking yourself, so is property investment worth the effort or investment. The short answer is, YES. However, to avoid portfolio stagnation down the line, get the right advice and structures in place at the start of your journey. Unfortunately selling property, especially a non performing one, isn’t as simple as hitting a sell button like you can do with other asset class investments.
Lastly, what should you do if you are already in the position described earlier in this article? Contact the right people who can provide you with a holistic current and future position on your portfolio. The advice you receive should put you on the correct course in optimising your existing portfolio, but more importantly, show you how to sustainably grow your portfolio into an asset worth investing in.
Vertical Investment Group