Investing through Financial Hardship
July 22nd, 2015 • 5 comments
As a property investor it’s highly likely that you have or will experience financial hardship at least once during your investment journey. These times of stress and hardship can be caused by many factors including, market fluctuations, periods of rental vacancy, increases to outgoings & maintenance or even a substantial change to interest rates.
While such periods are never comfortable and can take the fun out of a once high performing portfolio, it’s important to know that you’re not alone, that such challenges are commonplace in property investing circles around the country & there are plenty of options available.
In a lot of cases I see, investors who have sound dynamics in their portfolio often just need temporary assistance to get through the tough period and emerge out the other side.
In Australia, banks and financiers are required to consider offering you flexible payment arrangements during periods of financial hardship. Other service providers, like insurance and phone companies can also provide their customers with financial hardship arrangements for bill and debt payment plans.
The key to accessing these flexible arrangements and payment plans is getting in early. Ideally contacting them to discuss options before you fall too far behind will place you in good stead to work proactively with them to set a suitable and manageable arrangement.
Here are my top tips to dealing with financial hardship:
- Make a list of all the debt you owe. Find out what payments are necessary to bring your accounts up to date so that you have a clear position on what you need to negotiate.
- Get real and assess how long your position will last for. Do you require 3 months, 6 months or 12months of relief? Do you need to plan for longer?
- Are there any other factors that are affecting you?
- Formalise a Budget – To gain a clear understanding about what income you have to work with, what commitments can be made and which need to be deferred. Helpful budget programs can be found online at www………
- Financial arrangements with banks, financiers and creditors can include:* Postponed or deferred payments
* loan restructuring
* interest only repayments
* temporary overdrafts or lines of credit
* entering into refinancing or debt consolidation arrangements
If your financial situation worsens and becomes more permanent other options such as selling property and assets further information should be sought regarding options available to you. It’s always wise to seek advice from a professional financial adviser or from an independent financial counsellor about available options.
There are a number of helpful resources available for further guidance and counselling through tough periods including those below.
- www.moneysmart.gov.auFree budget calculator: https://getpocketbook.com/
For more information about financial counselling services, you can call 1800 007 007 or go to www.financialcounsellingaustralia.org.au
Making it through tough market periods can mean the difference between your portfolio surviving or diving with depositors often required to get extremely creative to survive downturns.
It’s key to remain positive and focus on what you can do during these periods and don’t be afraid to approach your bank and credit partners to discuss options.
Remember they are as invested in your property future as you are!
Hi Ryan, My question is we have had property in karratha for the last 7 years are we going to see a recovery in the market any time soon.The word around town is you can’t even make your building costs back if you were to sell at the moment.Rents are so low and so many available.Thanks Sharyn
Karratha has certainly experienced a consistent downturn over the last 2 years. Analysts do expect though that the worst is behind us with rentals and prices having settled down over the last qtr. Karratha is expected to begin recovery on the back of a number of new projects in the coming 18 months including Anketell Port. Like most Norwest markets Karratha is driven by supply and demand, with the supply of rental properties slowly dropping over the last 6 months.
Ryan Crawford, Group Director
Ryan, I purchased a brand new property off you with tenants. The build was very ordinary & market has fallen over a cliff.Where is Port Hedland Heading???I am wondering by this blog if many of your previous customers now are regretting their purchase off your company. Our income has halved, our costs increasing, and tenants blackmailing landlords to just stay on. Feel free to contact me personally by mobile or email. I am a very positive person and investor, but Port hedland is fast becoming our financial ruin.
Port Hedland has certainly transitioned through a serious downturn in the last 12 months. Can you please confirm the property you purchased, price and rental return?
Ahead for Port Hedland is the outer harbor project, expansion of the current port and infrastructure in from Newman for BHP, FMG and Gina just to mention a few. Unfortunately all will hold back from having a major effect on the towns housing market until the global iron ore price and resource sector investment dynamics change. It may take 6 months or 2 years to turn the corner, but when it does the regions will once again be underprepared for the vast increase in workers driven by these large scale projects resulting in increasing prices and rentals yet again. The markets can be very volatile during periods of growth and decline. My advice to all investors currently is to hang in there ahead of the next upswing.
Ryan Crawford, Group Director
Same ad Sharons question below?