Armchair investing during the crisis

As we head further into 2020 and the uncertainty it’s thrust upon us, it would be easy to simply accept defeat, jump back into bed and hide under the covers.

Yes, times like these have a tendency to break peoples’ resolve, but it doesn’t have to be that way.

In fact, while there’s been a material slowdown in activity overall, I’ve noticed the cream of investors are still rising to the top. Those with a solid mindset and well thought out strategy are looking to grasp the opportunities and secure their future.

And it’s being achieved while under lockdown.

In short, armchair investors are coming to the fore and many look set to enjoy a long-term financial windfall.

 Primetime

Despite the challenges laid out before us, the coronavirus crisis has handed us one thing that we all used to crave.

Time.

Time to slow down from busy job commitments that see us keeping long hours at the office, or bringing work home on weekends.

Time once devoted to social engagements or family commitments that, while enjoyable, allowed us to put off urgent and important tasks.

All these hours were never wasted, but we’ve been forced to reassess our priorities and, for the safety of our family and the wider community, spend most of our time at home.

Instead of wasting these bonus moments binging on Netflix, smart investors are treating this isolation stint as a golden opportunity to act on their financial plans.

 Active investor groups

Within our business, we’re seeing two main groups pick up their pace in the investment sphere.

The first are those aspirational investors who were serious about taking the plunge into becoming a landlord, but had been prioritising everything else.

This cohort were simply too busy to make their move, but now find themselves with an opportunity to get active. Many had done the hard yards in preparation – set goals, devised strategies and sorted out finances – but had been stuck in that all-too-common state of first-purchase paralysis. Suddenly they’ve been handed a period where there’s no excuse not to act.

The second group making their presence known are ‘cash’ buyers looking for stronger returns on their money.

These operators are more experienced, and often already own assets across property, shares and capital. Many are holding an investment in their SMSFs and have good liquidity.

With this group, returns are key and what they’ve seen over the last two months is the rollercoaster plunge of the stock market coupled with abysmal returns on cash holdings.

This is why property is an ideal asset during the crisis.

Think about it and you’ll see it makes sense. For starters, rental returns remain excellent for well-selected holdings. It’s not difficult to achieve a gross yield of five per cent or more for a residential rental. Couple that with an environment where you can borrow funds at an interest rate of between two and three per cent, and it’s obvious why cash investors are jumping in.

Best of all, the long-term value growth upside potential in property is exceptionally strong at present. You can buy well, let the rent help service the loan and other costs, then simply sit and wait for the eventual capital gains.

 Why armchair works

The infrastructure for investing from the comfort of home has never been better too.

The technology to make it happen is at its historic peak. The ability to operate remotely was already in place, but the crisis has brought into focus just how effectively it can be utilised by the wider population.

This means your trusted advisor is a simple video-conference away. You can seek all the support and advice necessary and never be at risk of blowing the physical distancing guidelines.

Technology also allows for excellent due diligence. From freely available online information about particular properties, sales evidence, market statistics, planning guidelines and so on, almost all the necessary information is on hand via your laptop or phone.

Add to that the widespread take-up of video inspections as a reliable option, and it seems there’s little that can’t be achieved in terms of selecting appropriate assets.

Email, docu-sign options and even online settlement processes have also grown in capability and acceptance. Locking down all the legal and finance is possible without a visit to your mortgage broker or solicitor.

And for portfolio builders, your advisor can conduct comprehensive ongoing assessments of your holdings remotely, proving you with all the minutia of how your plans are tracking and what your next steps should be.

A warning

While the present state of affairs is full of opportunity for armchair investing, I do have one word of caution.

Do not ignore the fundamentals.

Great investment assets will perform well throughout multiple market cycles despite the ongoing hurdles. If you purchase well and retain ownership for the long term, the results will come.

However, the key is correct asset selection, which is why using a trusted property advisor is essential.

 So, at this time of uncertainty, don’t just sit and rock in the corner. Grasp the possibilities and run hard. Your post-COVID self will be grateful you used this time to take action and shore up your future. Reach out and we can connect you with an accredited and QPIA qualified Property Investment Advisor. Our network has access to researched properties all across Australia, with research provided and analysed together with you and your property advisor on our private property platform.

Richard Crabb | MD ASPIRE Network | PIPA Board Member
Author: Richard Crabb | MD ASPIRE Network | PIPA Board Member

QPIA® - Qualified Property Investment Advisor | Licensed Real Estate Agent - VIC: 082760L - SA: RLA 292544 - QLD: 3579879 |Diploma of Financial Planning |Active Property Investor | Board member of PIPA - Property Investment Professionals of Australia. Richard is the Founder and Managing Director of the ASPIRE Advisor Network. After an extensive career in corporate finance and through his personal investing experience, Richard identified the need to create a system and framework that supports ethical, independent property investment advisors who operate in the new property market. The ASPIRE Advisor Network now supports independent property advisors across Australia by providing their business engine and acquisition process, designed around concepts of future compliance in the brand new property sector. Richard together with the ASPIRE team has also developed a complete end to end software platform, which is leading the way to deliver property investment advice in the new property space. Our goal is to work with investors to implement their goals and objectives buying investment properties across Australia, utilising a structure and information-rich end to end experience.

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