Published on April 10th, 2017
Three risks every property investor needs to mitigate
Profiting off investment property isn't a sure thing. There are countless risks that can compromise your income, from vacancies to tenancy disputes and even your property sliding back into negative equity.
Here at Elders Real Estate we're experts when it comes to mitigating these risks to help you get the best out of your property. To make sure you can do just that, we've put together a list of three of the most common risks property investors encounter.
Keep these challenges in mind, and put the suggestions we've provided to work and your investment income should remain constant and reliable.
1. Property vacancies
Most property investors will have to deal with a vacant property at some point. It's a fact of life, as national vacancies sit at almost 3 per cent, according to SQM Research. While there's no way to guarantee that your property will never become vacant, there's a number of strategies you can deploy to minimise the risk.
The most effective might just be hiring an experienced and professional property manager. Their efforts to minimise vacancies will start when they select your tenants, putting them through a rigorous screening process to make sure they're trustworthy and reliable.
From then onwards your property manager will work to keep your tenants happy, by undertaking inspections and taking on countless other duties. In the event that your tenant does leave, you'll have a real estate professional working full time to replace them as quickly as possible.
This will mean vacancies will occur less often – and that when they do, they're quickly remedied with minimal inconvenience to you.
2. Negative equity
The words 'negative equity will send a shiver down the spines of even the most experienced property investors.
The words 'negative equity' will send a shiver down the spines of even the most hardened property investors. For the uninitiated – this term describes what occurs when your property's value decreases lower than that of your mortgage.
This is something of disaster, because you'll effectively be losing money as the value of your property falls. Your best bet when mitigating your risk of sliding backwards into negative equity is simply to select the right property in the right area.
The NAB's residential property survey proves the importance of this, revealing that apartments some capital cities should be approached with caution by investors in 2017. On the other hand, houses in cities such as Sydney, Melbourne and Hobart are expected to perform well.
When it comes time to select your investment property, make sure you seek the right professional advice. With the help of a real estate agent, and their extensive market knowledge you'll be able to identify a property that will increase your net worth, just as it should.
3. Tenancy disputes
Even after your property manager has done all they can to keep your tenants happy, disputes can still arise. This is where having a property manager can prove especially useful, as you'll have an expert representative and advisor to help you throughout the entire process.
That way you can be sure that you're getting the best deal possible out of the dispute resolution, and that you've done all you can to avoid any disagreements in the first place.
Whether you're a fledgling investor, or an experienced property guru, you'll know that investing isn't as easy as buying property and watching the money roll in. Minimise your risk and simplify the entire undertaking by letting the expert team at Elders Real Estate guide you through the process of selecting and managing your property.
From finding you the right property, to managing your tenants, we've got you covered. Get in touch today to find out more about how we can help make your property management as risk-free and profitable as possible.