How to reduce your risk when investing in property

A savvy property investor is not ruled by the adrenaline rush of snapping up properties; rather, he or she is a strategist, hoping for the best but most definitely preparing for the worst.

In this article, we take a look at how to reduce risk factors associated with property investment. A savvy property investor is not ruled by the adrenaline rush of snapping up properties; rather, he or she is a strategist, hoping for the best but most definitely preparing for the worst.

Reality check

Whether you are a property investor or not, you’ll know that we have enjoyed a holiday from high interest rates over the last few years. Although we are not likely to see them hike to previous highs of 9 per cent, there is a chance that they will grow. Experts advise not to rely on interest rates to service your loans.

Keep ahead of the game

It goes without saying that being organised and methodical is a sure-fire way of keeping on top of your property portfolio. You might want to formalise this by introducing, for example, property inventory software or other systems to keep you on track.

Choose wisely

Just because house values have risen, this doesn’t mean that by purchasing one, you will hit the profit jackpot. If you pay through the nose as a first time property investor, you will be constrained by your limited finances, more likely to have a big mortgage with limited capital growth for a longer period of time. A good plan consists of buying investment properties in areas where those who live there are fairly well off so they aren’t affected by mortgage rate rises; plus, these types of property will remain in high demand, which will have a knock-on effect to their value. You will also be attracting tenants who you can manage in a professional way – check out inventorybase.com to see how this works.

Strategy

Put simply, you need one! Don’t rely on an ad hoc approach; instead plan carefully, have aims and objectives and work back from an identified end goal. Don’t be fooled into buying in hot spots that may well boom, then bust.

It really is all about strategy and this can’t be stressed enough. Be patient, do your research and make sure that if you take any risks they are calculated ones. And remind yourself that it’s not a sprint – rather a marathon; if you get rich, you will get rich slowly. Whether you are a property investor or not, you’ll know that we have enjoyed a holiday from high interest rates over the last few years. Although we are not likely to see them hike to previous highs of 9 per cent, there is a chance that they will grow. Experts advise not to rely on interest rates to service your loans.

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