Making a profit from your portfolio of property investments isn’t always a guarantee. There are a multitude of risks attached to investing in anything – that’s why we’ll take our time when deliberating whether to buy that big fat greasy sandwich, or the healthy salad.
Risks in property investment might include vacancies, to tenancy disputes, or even your property falling behind into a state of negative equity.
Need help mitigating the risks and getting the best out of your property? Look no further than our list of the top 3 risks that investors might face.
Keep in mind the challenges you might face, and try out some of our suggestions below. If you can do this then your investment income will remain sustainable and reliable. Maintaining that investment will help it to continue to grow.
1. Property vacancies
At some point in your investment history, you’ll likely have to deal with a property which sits vacant. With national vacancy rates sitting at around 3%, it’s a likelihood that you’ll be dealing with it at some point.
There is no way to ever guarantee that your property will never be vacant, but there are a number of strategies you can employ to make sure that you minimise the risk and therefore mitigate any unsavoury blowbacks.
Clearly the obvious way to mitigate any risks here is to hire an experienced and professional property manager. Their ability to minimise vacancies will start when they select your tenants; putting candidates through a comprehensive process in order to weed out any unreliable stragglers.
From then after, the property manager will make sure tenants are happy. They tend to do this by providing regular property inspections, general maintenance and by taking on a number of other duties.
If the tenant does decide to leave, the property manager will be able to fill the vacancy quickly. This means that overall vacancies will happen far less frequently at your property – causing minimal inconvenience for you.
2. Falling into negative equity
For any property investor, the term ‘negative equity’ will make you quiver in your boots. For anyone new to investment, negative equity is when your property value falls below that of your mortgage.
Turns out this is a bit of a disaster, as you’ll effectively be losing money. The more the price of the property falls, the more money you’ll lose from the investment. The best way you might mitigate this is simple – select the right property in the right area before putting any money into it.
The NAB’s residential property survey has proved ow important it is to not slip into negative equity. They revealed that apartments in some of the capital cities should be approached with a reasonable amount of caution.
hey also suggest however, that houses in the Sydney, Melbourne and Hobart areas are expected to perform rather well.
When the time to select an investment property comes, ensure that you seek the proper professional advice By utilising the knowledge of a real estate agent, you’ll be able to identify properties that will increase your overall net worth – avoiding that negative equity trap.
3. Disputes over tenancy agreements
Despite the solid work of your property manager, tenancy disputes can still be a major pitfall of investing. This is another area where property managers can be useful in the long term.
Having a property manager in the case of tenancy disputes means you have an expert representative and advisor, who can help you through the entire process of a dispute.
The best possible way to mitigate losses during a disputed case, is to make sure that you do everything to avoid the dispute in the first place. That way when it comes down to working out the dispute, you’ll have minimised potential opportunity for loss.
If this is your first investment or if you’re a property magnate, you’ll know that investing is no walk in the park. Minimising risk will ensure you make the most gains on your investment, so why not let a professional team manage your assets for you?