Why you should hold on to your property during Coronavirus
With all the news about Coronavirus, it’s understandable if you’re concerned about your property investment.
With the economy being hard hit by social distancing, you might even be thinking about selling your investment and getting out before it gets worse. While this is a very sizeable bump on the road, it’s not the time, nor is it ever the time, to panic-sell.
Let’s look at a few reasons why you should hold on to your property during the Coronavirus crisis.
Long term investment
Property is a slow, low-yield investment that takes a long time to pay off – in fact, it can take a generation to see capital growth.
There are always going to be turbulent times when you in invest in property. It just so happens we are currently experiencing a very uncertain time in our history. But it’s not as though previous generations didn’t have similar periods. It wasn’t so long ago that we had the Global Financial Crisis. We all got through that and we’ll all get through this as well.
This isn’t to say being worried about the fallout from Coronavirus isn’t valid – it completely is. However, a period of 6-12 months in the grand scheme of things seems minor when compared to an investment that spans decades.
It’s still low risk
The simple fact of the matter is people will always need a place to live and a rental is always going to be in demand. But it’s important to realise it’s not going to be an easy journey. In the months ahead, some of you will have difficulty leasing your property, or have tenants unable to pay because they have lost their jobs.
Yes, this is less than ideal, but it’s not going to last forever and you will still come out the other side holding quality assets. It’s all a matter of whether you’re willing to ride it out.
Holding onto your property is also, believe it or not, a risk-adverse move. The cost of property, particular in certain areas of Australia, is going to be negatively impacted because of this pandemic.
Selling at this point in time is risky because you may not get the return you expected. And it’s not as though there is something better to invest in at the moment – shares are extremely volatile. It’s best to stick with the old adage of “safe as houses,” because outside of a bank, there’s nothing safer.
Covering your assets
This crisis is a good reminder that there are a couple of things you can do as a landlord to protect your assets. They include:
Keep a buffer: You should always keep a financial buffer in case times get lean. It could mean the difference between getting through a scenario like the one we’re facing and having to sell your property.
Quality landlord insurance: Besides protecting yourself against financial loss caused by damage to your property investment, is also covers you against loss of income due to unpaid rent. Unfortunately, many of the top insurers are closed off from taking on new policies for now, but this is good one to remember for later on.
Hopefully the above points have made you reconsider ‘cashing in your chips’ during COVID-19. If you do have concerns about sustainability in the rental market, please communicate them to your agent