What Does The ‘Long Game’ Look Like For Property Investors?
High interest rates and stubborn inflation have certainly put the squeeze on incomes in the past 12 months for almost everyone.
While term deposit investors have been sitting pretty, their time in the sun will soon fade as cuts to the Official Cash Rate (OCR) begin to kick in and their monthly returns begin to fall. Savvy investors may look to other high-quality fixed income securities instead, or rekindle their interest in New Zealand’s sharemarket which has struggled in recent years.
Commercial property remains a solid investment.
Commercial property remains a solid investment but high interest rates have impacted monthly returns. This remains a growth asset, and with rising construction costs, it’s hard to imagine property prices are going anywhere except ‘up’ in the years to come.
This cyclic nature highlights the importance of investing for the long-term. The real money in property is not made on annual yields. It’s made on capital gains – i.e. the amount your building increases in value over time.
At Classic Collectives Ltd, we provide access to premium multi-million dollar commercial property investments using a bespoke model. Our private Collectives offer eligible investors the chance to collaborate with others and own a first-class asset they would otherwise be unable, or unlikely, to purchase on their own.
Collaborative Model Grants Access to Elite Commercial Investments.
Each Collective comprises approximately 8-10 investors who are carefully vetted and put together by Owen and the Classic Collectives team.
In keeping with a long-term approach, our Collectives wait five years after a property is purchased before undertaking a strategic review, and then annually thereafter. This allows the opportunity for growth to occur and helps smooth out those bumpy economic cycles where interest rates – and therefore yields – will likely rise and fall.
Empowering Investors: Collaborative Decision-Making Ensures Stability in Uncertain Markets
At each review, our investors meet in person to openly discuss their collective strategy. Are the long-term fundamentals of this investment still good? Is it the right time to exit and move on? What is the status of the lease? What are the upcoming maintenance requirements? Joint decisions are made and investors have the flexibility to exit if they wish.
Managing your emotions can be a tricky (and sometimes unexpected) aspect for investors to deal with. Panic can set in when your income starts falling and growth is constrained. With shares, it’s all too easy to pick up the phone and sell down your assets. Property cannot be offloaded quite that fast and one benefit of our Collectives is you are ‘in it together’. The security and steady influence that investing as a group can provide often helps individuals to stay calm and hold their nerve when interest rates rise or property values dip.
Owen’s Investment Wisdom: Patience Pays Off in the Long Run Amidst Market Volatility
Owen believes if you’ve invested in a quality asset, time will fix everything. Right now, rest assured that interest rates will come down and when leases are renewed, the increase in value will be significant.
Knee jerk reactions will often end badly so remember that investing is indeed a long-term game regardless of what asset class you are investing in.
EMAIL Owen.Cooney@classiccollectives.co.nz
PHONE 027 222 6932
