It is common to experience ups and downs in running a business including property investment. It is like a cycle that you cannot avoid because that’s how it works.
Every downturn may affect differently to every individual investor. Some of them are significantly affected to the point they cannot get back to where they were.
Some of them successfully survive and continue expanding their investment. It depends on each individual situation regarding to financial setting and other crucial factors.
However, there are always some lessons you can learn from a property downturn. Thus, it is not always a bad thing.
What to learn from a property downturn
There are things you can actually learn from property downturn. So whenever it happens to you, you won’t feel too helpless because there will be something you can gain even if it is not in a form of financial benefit.
Remember that property business has its cycle more or less. The cycle is always about downturn, stabilization, and upturn.
There is also possibility for a property cycle to boom. However, it may take years after severe downturn for it to truly happen in a property market. The point is, each period is cycled.
It means, the downturn won’t last forever. A downturn is one part of the cycle so it will change eventually.
What to learn is how to be more prepared to face the downturn so your investment won’t get affected significantly.
What you can learn from a property downturn is that short term factors are not what can help you to survive, the long-term strategies are.
Through property downturn you will learn that cash flow is not the only important thing to survive. In fact, capital growth of your portfolio plays more important role. Following long-term strategies will save you from severe loss during a downturn.
You need to keep in mind that property investment business is a finance game.
Thus, every step you take needs to be calculated. Your finance structure needs to be solid and correct in order to be ready to face a downturn in property market. It is also highly recommended to be prepared with financial buffer so you still have financial source you can rely on during a crisis.
A property downturn will teach you that location of property is more important than the price.
Most investors focus on getting property investment with low price. However, that type of investment property rarely survive whenever a downturn happens.
Buying investment grade property at the right location with healthy local economic growth is more recommended. Investment grade property has been proved to be more resilient to break during a downturn.
The market has its phases.
However, smart investors won’t budge just because of that. You need to be creative and smart investors who focus on growing portfolios and investing in the right properties that match your financial situation.
Making long-term strategies is also the key to survive from any phase happening in the market. This way, you will always be steps ahead of the average.