Bend or Break – The Zen Of Property Investment In 2024

WORDS: Lisa Harris PHOTOGRAPHY Supplied

Whether you are starting out or adding to established investments, 2024 has been a challenging year for those seeking to build a property portfolio.

Make no mistake – we love property, and our portfolio continues to serve us well. 

But it’s not all clear sailing. In fact, 2024 has already proven to be a tough year. Changing market conditions have made it increasingly difficult to locate new opportunities that meet the high quality and viability standards that we look for in our own investments -and those that we secure for our clients.

As investors, we know that investing in multiple markets takes time and energy. Our portfolio spans states and regions with investments in Melbourne, regional Vic, Brisbane, and Gold Coast. This is designed to spread our risk – and mostly it works.

However, there are pressures that come with tracking the changing market conditions in each area. 

This is all compounded by the fact that finance is currently the most expensive in several decades. Like many, our repayments on our 13 settled investments peaked at 30% beyond what we were paying last year.

Sales in many projects nationally have begun to stall as prices slide beyond the reach and means of the very people designed to buy them. We find many clients can’t accept or service the cost to build combined with the chokehold that lending services impose on non-cash buyers.

Our quest for opportunities that work for us and our clients has driven us to broaden our range of off-market suppliers dramatically over the last 5 months. 

As a result, we currently access multi-billion dollar developer pipelines of projects nationally, meaning that we often need to monitor over 11,000 listings at a time from various developers in the wholesale property market.

With the current market conditions, as the potential pipeline of opportunities broadens, the number of genuinely outstanding opportunities that fit our circumstances contracts. There are far fewer needles in an ever-increasing haystack. 

There’s no question that it’s been a tough year in a tough market. But it’s not an impossible market.

Over the course of this year, we have come to recognise that simply holding onto the same portfolio of properties forever risks missing very real opportunities. 

We needed to bend – and we did.

The first thing we did as investors was to review and sure up our finances to ensure that we were protecting our portfolio. We made sure we understood our position and ensured that we had pre-approved access to funds when the right opportunities emerged from the mist.

Then we doubled down on the already high level of scrutiny we apply to suppliers and their planned projects. We now spend even more time screening developers and their projects. Each opportunity for us now requires even deeper scrutiny of the market, location and local conditions, the developer track record and the general finance climate. This often uncovers sites several years before the showrooms for retail agent campaigns are even built.

Importantly, we recognised that our portfolio is a fluid thing. So, we tuned our portfolio and made some significant changes to match what works best in the current market conditions.

This resulted in some tactical decisions to make sure that we stay on top of the market. Our personal 2024 portfolio –

1. Furnished and switched 2 long-term rental properties into short stays,
2. Sold 3 aged properties which have peaked their highest 7 years each of depreciation section 40 tax benefits,
3. Bought 3 new properties in Victoria, after reviewing over 30 locations and after 6 months of research – with finance achieved at 80%,
4. NDIS settlement ready house and land package, 
5. 2 purchases in Malvern which have grown by 50% since their purchases in 2021,
6. Maintained our voluntary contributions to our SMSF (as we have for every year) to their maximum levels.

We know that reviewing a property portfolio is difficult. It always is for us. Every property in our portfolio was hard-won. Every property had its challenges. Every property carries with it the promise that it had when we bought it.

But portfolios are always in flux and now is the time to bend. We believe there are ways to change what you have, and to add something new – and tune your portfolio to work well – even in today’s unpredictable climate.

You can find out more at www.finvesteducation.com.au