Bulletproof your portfolio

In my last article, my advice is watch out for 2013 (and beyond). Please don’t get me wrong, I didn’t mean to stop you from property investing nor selling all or investment properties. However, I think it’s time for property investors to step back and start to bulletproof their portfolio. In my opinion, invest in properties is a sure way to improve your wealth provided you know how.

Legendary investor Jim Rogers once said “If the economy improves I’ll make money because the demand for those assets will increase. On the other side, when governments get in trouble they print more money and when they do that you can protect yourself by owning real assets.”

Here are some of the ideas how you can bulletproof your property portfolio.

Location, location, location  – look for areas that can weather any downturn. A good example is residential properties near colleges and universities that suitable for student housing. Whether economy is good or bad, investment in student housing gives you consistent returns. In fact, when the economy condition is bad, more student prefer to further their studies instead of going out to workforce market. Other that student housing, one can look for areas set to growth with infrastructure investment such as new highways and even more compelling MRT route.

Focus of fundamental – go back to fundamental criteria when evaluate investment property. Ensure the rentability and yield of the properties that you want to invest in. For investors evaluating new property launches, one can “benchmark” the rentability and yield from surrounding properties. Investors also need to consider whether the market can digest when more supplies going to the market. Finally, buy from established developers. To further strengthen your portfolio, one should invest in existing properties on the market because “what you see is what you get”. The rentabilty and yield (of existing properties) are REAL instead of developer’s promise or artist illustrations.

Know what to sell – investors should be selective in deciding which property to keep and sell the less attractive ones. They should consider selling substandard properties handed over by developers, or if the property is not so easy to rent upon completion. Unless you can see long term potential and having huge cash buffer to service the loan, one should consider sell the above mentioned properties.

If you have more idea on bulletproofing property portfolio, feel free to share in comment section. Thanks!