Get on top of your game to survive a recession

Investing in property in the UK has been a winning proposition for years as rising prices continue to tempt investors wanting to cash in on the boom. However past performance is of course no guide to the future says Amer Siddiq of Property Portfolio Software

There could be tight times ahead for investors in commercial property.

Your residential counterparts are OK at the moment. Residential buy-to-let property is seeing a boom because an increasing number of people who can’t afford to buy homes have no option but to rent. Sadly, we are unlikely to see the same trend in commercial property.

There is a clear difference between the two types of investment. For people buying a house, money is becoming more difficult to borrow with banks and mortgage institutions closing their doors thanks to the global credit crunch.

If the lenders require buyers to put down 10 percent, 20 percent or even more as a deposit, then ultimately fewer buyers will be able to buy a home. This lack of affordability is driving the demand for rental housing.

Commercial property investors of course will not benefit from the same financial circumstances. If the current economic wavering turns into a proper economic downturn in the not too distant future, my prediction is that commercial property investors will suffer as companies become more cautious in their spending.

Fear of a recession could persuade businesses to scale back expansion plans or postpone moves to new premises which will decrease the demand for commercial property and make it less attractive as an investment.

With this is mind, now is the time to get your affairs in order and ensure your commercial property portfolio is as organised as can be. Those who enter tough times on top of their game are much more likely to emerge the other side, no matter how bad it gets.

It’s vital to be aware of exactly how much your portfolio actually costs you to run and maintain. Get your finances in order with cost predictions and cash flow forecasts to estimate future costs. These should include your potential tax liability. Having these figures clearly worked out and tracked will help you ensure you don’t run out of money at critical times, especially if a large repair bill sideswipes you.

You should also actively minimise the amount of time spent running your portfolio. The more you can automate the tasks of ensuring buildings are safe and legal, the more time you will have to monitor real problems that may arise.

Use easily available software tools to keep essential information up-to-date, and track when legal requirements are due for renewal.

If you can be organised in this way, you will save time, money and effort in the long-run by better managing your finances and resources. In the event of a recession, you will be best placed to spot problems as they arise and deal with them appropriately.

And if the current threat of an economic downturn does not arise, at least you can have the assurance your portfolio is organised and on track.