Assets vs Liabilities

Are you creating assets or liabilities?
As any seasoned investor will know – the true value of your property investments can go way beyond basic profit and loss. While on paper the capital value or current rental returns from your properties may seem stable, it takes more insight to fully understand both the opportunities and weaknesses in your existing property portfolio.

How the right property adds benefit to your portfolio
Choosing the right property to purchase at the outset is the key to ensuring that you have a portfolio that consistently performs, both in terms of a stable rental return, and in the longer term – with good capital appreciation. 

When researching a potential acquisition, it is vital to do your homework. Is the location popular with potential tenants? Are there any micro or macro-economic forces at work which are likely to influence future growth or liquidity?

Undertaking due diligence throughout the purchase stage will allow you to get a head start in ensuring that your property investment is one that is likely to be an asset.

Is your property investment a liability?
While it’s easier to determine potential future benefit of an investment at purchase stage, many landlords will either have a property which was purchased at a different time in different circumstances, or even become an ‘accidental landlord’.

In these cases, it’s vital that you weigh up the benefits and potential pitfalls of your existing portfolio. Ensure that you have a true recording of all the associated costs and income from your property investment.

Repairs and Maintenance
It is vital that you fully understand, and record repairs and maintenance costs associated with your existing properties. For older leasehold properties, increasing service charges can wipe out your rental income if not recoverable by rental increases if the demand is not available.

Internally, keeping your property in good condition throughout all tenancies is vital to avoid running into unexpected repair costs, and regular inspections should take place to ensure that your property structure and condition is in good shape, and also to ensure that tenants are aware of things such as how to adequately maintain items within their obligations and properly ventilate the property.

Market Conditions
Depending on your investment strategy – changing market conditions can very impact on whether your view your property as an asset or liability. For example, if your portfolio is centred within one city or even country, prevailing economic conditions can determine property price growth – meaning that timing of sale or your exit strategy may be accelerated or delayed.

Mass development or regeneration within a location in which your property is situated may have the knock-on effect of bringing new jobs into an area increasing demand and therefore upping rental values – however conversely if your property is tired or dated, it may fail to compete with newer, higher specification property. Properly evaluation of current market conditions at regular intervals allows you to make the right decisions when it comes to your property portfolio.

Your Priorities Have Changed
In some instances, even if your investments are performing well financially – your personal circumstances may mean that what was once a great asset to your portfolio is no suited to you.  For example, you may wish to move location and no longer have the ability to let and manage your property, or you may even wish to use your existing rental investment as a place to live or retire to.

How Benoit Assist Investors
Our vast experience in assisting individuals and companies in maximising the potential of property investment means that we are well equipped to help any investor to ensure that properties within their portfolios remain great assets. From our buyer’s agency service, which helps investors to source the right property for their needs, to our full managing agent services which help to ensure that your property is suitably maintained. Get in touch today to find out more about how help landlords to make the most of their investments.

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