Worried about bad tenants or buying the wrong property? Whether you’re a first time investor, or you’ve got a portfolio, as with any investment, there is risk.

But the good news is, there are always ways in which you can reduce your risk.

Here are a few suggestions to minimise some of the risks associated with property investment:

Buying the Wrong Property

As with any venture, the key to buying an investment property is to do your homework. You need to view the property as a business. Read what the property magazines are saying, so speak to a property specialist or knowledgeable friend or colleague who will tell you what to look for and what to consider.

What if I Lose My Job?

This is a common risk and holds many people back from buying an investment property. When you’re doing your budgeting, make sure the rent covers your expenses, that way, you needn’t worry about losing the property if you lose your job or other source of income.

If you do decide to negatively gear the property for tax purposes, plan for a change in your financial situation by having some savings as a backup. You can also take out income protection insurance which will cover you should you fall ill and be unable to work.

Drop in the Market

Property investment is a long-term investment; while the market will move up and down, generally property does increase in value over a number of years. It really depends on what you’re looking for from your investment. If you’ve geared the finance to suit your needs, a drop in the market is only really going to affect you if you are planning on selling.

If there is a drop in the market, take advantage of it – now might be the time when you can look at getting into the investment property market!

Tenants Not Paying the Rent

This risk can easily be reduced by using a management company to find your tenants. Good property managers use many screening tools, such as employment verification, contacting previous landlords, credit checks and using a tenant database to ensure you get a good, reliable tenant. Plus they will continue to communicate with the tenant, make regular inspections and update you with reports, giving you peace of mind your property is being properly cared for.

Landlords insurance can also cover you if a tenant leaves without paying the rent.

Damage to the Property

You can get peace of mind for damage to the property by taking out landlords insurance. You buy it for your own home, your car, and even your life, so get it for your investment property. Shop around to get the best deal, and don’t forget to check the small print to see what is and isn’t covered.

Landlords insurance comes with an added benefit as its tax deductible.

There is a risk with every investment, so our advice is, talk to the experts, do your research and go with what you are most comfortable.

It is a good thing to look at the risk, but also look at ways in which you can reduce your risk.

Once you have done your finances and are ready to buy, come along and talk to us.

Or even if you’re just interested in finding out more about property investment, our knowledgeable and experienced team can talk you through the process and tell you what to consider so you can make informed decisions.

We are one of Newcastle’s longest established real estate offices and have helped hundreds of property investors realise their dreams over the past 40 years, so give us a call on 02 4954 8833 or pop into our office for a chat.