10th February 2019
Liquid Property Investment: Regain Control Over Your Investing
While property investments are a sound financial decision and are generally one of the most lucrative ventures, there is still a lot to be said about liquid assets. Liquid investments are things that can easily be sold and turned into real money. They have earned their name due to the notion of flexibility and are favoured by many for just that. Property, physical items (such as jewellery and art) and cars aren’t generally considered liquid investments because of the time it takes to convert these assets into cash.
An important trait of a liquid investment is also its capacity to be exchanged for money without losing value. It is for this reason that an investment’s liquidity is considered to be on a scale, with some investments more and some investments less liquid than others. For this reason, property has not traditionally been classified as a liquid investment. Given the timespan between putting a house on the market and receiving the value into your bank account, real estate is relatively fixed – particularly if it is occupied by tenants.
Fortunately, and we know we say this a lot but, Airbnb has changed things. Before recently, it was never really possible to maintain a property investment without long-term tenancies. With this being the primary reason that so many of these types of assets aren’t pursued by those looking for liquidity, more options are available than ever on this front.
What is a Liquid Property Investment
As mentioned, real estate isn’t usually considered to be a liquid investment for the most part. With conditions such as tenancy agreements restricting when you can put a property on the market, selling this asset is generally a lengthy process. It’s for this reason that many investors choose to go with other routes so that they can cash in on their investment at a moment’s notice. Those seeking flexible and straightforward investments have typically avoided purchasing property as there are many hurdles in traditional processes.
With the rise of Airbnb, on the other hand, liquid property investments are possible. Airbnb provides homeowners with the opportunity to rent out their place on the platform for however long and whenever they want. Taking this approach to property investment frees up the asset completely. Without being stuck in long-term contracts, owners are able to sell the property whenever they want or need to.
Restrictions Faced with Traditional Property Investment
Traditional property investments are, or have been, restricted by their purpose. Renting out the place for a fixed and usually extended period of time has put limits on those who own it. If you are locked in a tenancy, you aren’t able to gain access to the property if you ever need it. Emergency circumstances aren’t typically clauses to break contracts, so, if a landlord ever finds themselves in financial difficulty, they’ll have to source funds from elsewhere or wait until the fixed-term is over. For some, this situation isn’t ideal, it’s a large commitment and isn’t something that fits everyone.
The Benefits of Going with a Liquid Property Investment
Over a traditional property investment involving tenants, a more liquid property investment strategy through Airbnb can have a huge range of benefits. Freedom to do as you please with your asset is something that many investors value and with this route, it is possible.
You’re Covered in a Financial Emergency
In a financial emergency where you need funds fast, traditional property investments aren’t much help. There can be months or even years between when you find out you need the money and when you actually get it. In contrast, an Airbnb rental works on a very short-term basis. If you need to stop renting out the property so that you can sell up, you can just block the calendar and no more bookings. Even if you have nights booked in advance, cancellation is possible for a small fee. Liquid property investment frees up money and releases investors from the binds of tenancy agreements that can be huge obstacles in dire straits.
Renovate Whenever You Decide to
Even if you’re considering selling-up and want to renovate to help boost property value, traditional rentals will make it difficult for this to happen. While you may not want to have an empty property while you make your changes to avoid losing income, you won’t be able to perform any substantial work while your tenants are in residence. This can add additional time to what is already a lengthy process.
On the other hand, Airbnb is vastly different, you’re able to renovate whenever you decide to. Taking a break from using the service is simple as you have full control over when you are hosting and when you are not. This is something that is valued by the thousands of Kiwis utilising Airbnb and is a huge drawcard to those considering this type of property investment.
Take a Break from Leasing Out Your Property
Whether or not you are partaking in renovations, the ability to take a break from leasing out a property can be highly appealing. If you’re somebody that needs access to a property in another city every once and a while or periodically, then this is something that Airbnb can help sort out. With a liquid property investment, the hurdles around gaining access to property when necessary are removed. Whether you need to make a minor change to your home or to live there for a while, the choice is up to you.
On the face of it, property investment hasn’t been considered the most liquid of investments out there. While there are always processes and boxes to tick, through Airbnb assets are able to be in the complete control of the owner. Without the restrictions posed by long-term tenancies, property investors are able to find more freedom in the houses they own, to sell up when needed and to expect to be able to make their calls, on their terms.