February 8, 2022

How property investors can navigate an uncertain 2022

Property investors need to take stock and assess their market and on-ground operational conditions to ensure they have the confidence, means and knowledge to navigate potential shifts and challenges.

Combined with the omicron variant, there is further uncertainty thanks to potential interest rate rises, federal and state elections and the ending of many government stimulus schemes.

Securing goods and services

Unlike shares, property is heavily reliant on goods and services. That means COVID-19 related worker shortages could have a major impact on property owners’ ability to secure services, vital for the upkeep of their investment portfolio.

For rental providers this includes repairs, renovations and utility services to ensure tenants’ expectations are met. Tradespeople can be difficult to lock in at the best of times, but any future COVID-19 spikes that drain the workforce will make them even rarer.

COVID-19 has also affected supply chains, meaning products and materials needed for property maintenance and upgrades may take longer to arrive than usual – and at a higher cost. Bloomberg

Build or strengthen relationships now, so they are likely to return your call when they’re rushed off their feet and covering for sick or isolating colleagues. If they can’t fit you in, they may be able to refer you to a trusted contact within their industry.

COVID-19 has also affected supply chains, meaning products and materials needed for property maintenance and upgrades may take a lot longer to arrive than usual – and at a much higher cost.

Being proactive by addressing potential property maintenance issues early may prevent a great deal of heartache down the track – and avoid angry tenants who will have little patience for global supply chain issues if their home is unlivable.

Having a capable and trusted property manager can be critical in flagging potential issues ahead of time, so it pays to have someone reliable in your corner. However, even at the best of times good property managers are hard to find. It’s demanding and detailed work, and they’re often stretched thin.

That will only be amplified with any future COVID-related worker shortages. If you’re unhappy with the level of service your property manager is providing, now might be a good time to ask around your network for a replacement.

Conversely, if you’re satisfied with your property manager, it might be opportune to invest some time strengthening the relationship, keeping you in good stead should harder times hit in the months ahead.

Spending the time and money shoring up goods and services for your property portfolio is a sound investment for rental providers. Badly managed properties lead to unhappy tenants, which can lead to costly consequences – lost rent, rent reductions and vacant properties.

Defying market doubters

There’s no doubt the potential interest rate rises have rattled many within the investment community. As such, the predictable negative market commentary surrounding property is being trotted out again.

Times of flux and uncertainty can prove dangerous for many property investors who have otherwise run a sensible and considered long-term investment strategy.

While the record growth many markets achieved last year can’t be expected to continue, property remains a strong long-term investment, despite any market and political shifts.

Many successful property investors and even property professionals become suddenly spooked in times of doubt – such as the GFC and 9/11 – and give in to the negative property market commentary. Some have liquefied healthy property portfolios, years in the making, and moved into other investment options.

Years later they are typically regretful and frustrated as they’ve watched on the sidelines while their old properties accumulated incredible value once the market bounced back – as it inevitably does.

While 2022 has challenges ahead, ensuring your on-ground operational management plans are robust and responsive, and your long-term investment strategy remains defined and consistent, will stand you in good stead through any uncertainty.