Struggling With an Underperforming Asset? Here’s What to Do Next
If you own a property that isn’t performing the way you expected, you’re not alone.
Underperformance doesn’t always mean you made a bad decision.
More often, it means something in the original setup needs to be reviewed.
The key is not to react emotionally — but to respond strategically.
Why Properties Underperform
In our experience, most underperforming assets come down to three core issues.
1. Location Mismatch
The property itself may be sound,
but the pocket may lack long-term demand drivers.
This can include:
– limited employment growth
– weak infrastructure investment
– oversupply relative to demand
Without strong fundamentals, growth and rental pressure tend to stagnate.
2. Entry Price
Overpaying at purchase quietly limits outcomes.
A high entry price:
– reduces equity growth
– restricts refinancing options
– and limits your ability to leverage into the next asset
Even a good property can struggle if it was bought at the wrong price.
3. Structure
Structure is often overlooked — and it matters.
A poor loan or holding structure can:
– drain cash flow
– increase tax inefficiency
– block future purchases through equity
In many cases, it’s not the asset that’s failing — it’s the structure around it.
What to Do Instead of Panic-Selling
Fixing an underperforming asset isn’t about rushing to sell.
It starts with an objective review of:
– growth data
– rental performance
– market cycle position
– equity and borrowing capacity
Only then can you decide the right course of action.
The solution typically falls into one of three paths.
Option 1: Hold — With Context
Sometimes, the best decision is to hold.
If:
– the location has long-term fundamentals
– the market cycle hasn’t played out
– and the asset is financially manageable
Then time — not action — may be the missing ingredient.
Option 2: Reposition
In other cases, repositioning can unlock performance.
This could mean:
– adjusting the loan structure
– improving rental strategy
– or aligning the asset differently within your portfolio
Repositioning is about optimisation, not replacement.
Option 3: Exit — Strategically
Sometimes, exiting is the right decision —
but it should be strategic, not emotional.
A planned exit considers:
– capital gains implications
– opportunity cost
– and how the funds will be redeployed
Selling only makes sense if it moves you closer to your long-term goals.
The Most Important Step: Clarity
An underperforming asset doesn’t fix itself.
But it also doesn’t need panic.
What it needs is:
– clear analysis
– unemotional decision-making
– and alignment with your broader strategy