The Joy Of Downsizing and Simplifying A Property Portfolio

In every investor’s journey, there comes a time to downsize or liquidate a portfolio. For me, 2023 marks the point when this decision was taken, jointly with my significant other. 

Downsize

The timing was not intentional but rather ‘involuntarily’. A confluence of new housing and tax regulations in the Netherlands renders almost 40% of our portfolio no longer viable. Regulatory changes is 1 of the top reasons to sell an investment property and is the main reason why I limit my exposure to Singapore real estate.

The Netherlands is where I started my investment journey during the GFC which enabled me to stop working at 48. It is where the bulk of our property portfolio lies after executing our exit strategy in the US market last year. So this hit on an already parred-down portfolio is unwelcome, to say the least.

Surprise Outcome

However, as divestment activities began, a sense of calm and relief set in. It radiates out in waves, like when an object hits the water surface, expanding in concentric circles before dying down. I was relieved not having to strive so hard anymore, and being grateful to handle lesser tasks and responsibilities. 

The downsizing and simplification of our property portfolio has brought about positive effects in other aspects of my life. And surprisingly, these effects are more pronounced than those from financial minimalism and de-cluttering of physical possession. 

1. Smaller Scope

Finally I can slide my antenna down a few notches. No more following news and developments affecting a widened scope of  the property sector. The reduced scope means relinquishing focus on the highly regulated mass market segment. 

Over the past year, the Dutch cabinet has issued new rules to reign in a runaway property market where demand far outweighs supply. Amsterdam was ranked 7 in a Real Estate Bubble Risk report in 2022. The price hikes extended to other big cities and across the country.

2. Less Stress

With a bigger portfolio, the sheer number of ongoing tenancy and property management tasks can be overwhelming at times. Almost every month there would be a Home Owners Committee meeting, tenancy renewal or property maintenance to take care of.  In some months, there would be multiple such occurrences, heightening the stress. 

Despite being the best in generating cashflow, rental property is the least passive. It requires the most hands-on effort compared to other streams of passive income. 

3. More Time More Freedom 

A reduced property portfolio feels lighter, giving me more sense of freedom. It releases more time for other aspects of life such as catching up with friends, entertainment, travel and hobbies. It’s nice to have time to just enjoy versus having to manage something all the time.

Thinking back, we have planned our lives around our properties. For example, prior to the pandemic, we made it a point to go Florida every year to visit our properties and keep in touch with the Home Owners Associations, our tenants and network of contacts. 

Our trips were always planned to coincide with Home Owners Associations’ meetings, renovation projects or pre-hurricane season to fortify our properties. Even in the Netherlands, our social lives tend to center around where and when we have to be for matters concerning our properties too. 

4. Better Decision-Making

A scaled-down property portfolio means better decision-making as there is now more breathing space to deliberate and work out different scenarios. In the past, decisions were taken quickly in order move on to the next to-do item on the list. It doesn’t help that some tasks can be time-sensitive, like a choked sewage or faulty aircon during peak summer. 

Of late, each decision has become more conscious because each is more precious, without the might of a bigger portfolio to mitigate errors. In a smaller portfolio, every decision is amplified.

I like that there is now more time to analyse expenditures and outlays, with less data fields to manage and update, resulting in better planning. 

5. Selective Relationships

Another upside of downsizing and simplifying our property portfolio is the lesser need to deal with unreasonable members of Home Owners Committees. 

Owning a unit within a shared building often requires working with and accommodating other members of the Home Owners Committee. Some may hold different views and attitude, and can be difficult or even outright hostile, going out of their way to cause misery for the rest. While we count ourselves lucky, over the years we’ve had our fair share of nasty owners who have tested our patience and neighbourliness. 

While issues are resolved by majority vote, confrontational and antagonistic sessions always leave an unpleasant aftertaste. With the disposal of some of our properties, such encounters will be reduced. We will choose to keep in contact with the nice owners, some of whom have become friends over the years. Flushing out toxic relationships is liberating!

6. In Sync

The downsizing and simplifying of our property portfolio is in sync with our new approach to slowly spend down our wealth. We are fortunate to be in the position to fund the rest of our lives comfortably, even if we stop all investment activities. 

Live rich and die poor – that is our new motto which makes perfect sense for us, especially being childless. For whom are we striving for in the end? The plan to is slowly liquidate our investments to free up time and mind-space for other joys in life, and to spend more time with people we love and care about. 

The Right Time

Having said that, managing our property portfolio gives me purpose – not the only but an important one – that I crave since leaving the corporate world. It is both interesting and rewarding, although challenging at times. We will continue to manage the rest of the portfolio with the appreciation that one day it will end too.

Property investing has enriched my life tremendously, and not just financially. It has taught me things beyond formal education and work, kept me on my toes and brought me to new places – physically, mentally and emotionally. 

Through property investing, I have met many interesting people from all walks of live, from all over the world: rocket scientist from Italy, Canadian founder of a 3D printing start-up using recycled plastics, high-profile Dutch celebrity…to name a few. It will always be my first love, and for many years to come. 

Uhmm…second love I mean, right after my significant other of course 🙂

 

Still in love, 

Savvy Maverick 

 

(Main image: Alexei Maridashvili, Unsplash)

 

Disclaimer: The views expressed here are drawn from my own experiences and do not constitute financial advice in any way whatsoever. Nothing published here constitutes an investment recommendation, nor should any data or content be relied upon for any investment activities. It is strongly recommended that independent and thorough research be undertaken before making any financial decisions, including consulting a qualified professional.