Making money through property comes with risks, but there are steps you can take to minimise the impact if things go wrong.
Blogger: Helen Collier-Kogtevs, Real Wealth Australia
The biggest breakthroughs I’ve experienced in my own property investing journey have had one thing in common: they’ve all been related to my mindset regarding how I handle risk.
Like most property investors, I worried a lot when I was a new landlord. I fretted about tenants moving in and out, paying rent on time, looking after our properties and causing unnecessary damage.
But over the years I’ve learnt to worry less about things that really don’t matter, because a good risk mitigation strategy always allows me to sleep better at night without fear.
There’s one sure-fire way that I know of to get rid of fear and it involves education. When you learn all about the different aspects of property investing from people who are successful investors themselves, it helps you to improve your own knowledge base – and you know what they say about knowledge and power!
You can never completely eliminate risk, because the reality is, some factors to do with property investing are out of your control. However, you can reduce your anxiety by identifying the risks and working out ways to mitigate them. The big three risks that cause most people to worry are as follows:
Risk 1: “I’ll have trouble finding a tenant”
Downgrade this risk by buying property in areas that have a strong rental population: this information is available from the Australian Bureau of Statistics and by speaking with local real estate agents. Having a qualified, experienced property manager on your team will also help you to ensure your property is tenanted year-round.
Risk 2: “Interest rates are going to go up”
The Reserve Bank and individual lenders decide interest rates movements, so you have no control over this. You can control your own finances, though, so if rising interest rates are causing you anxiety, work on creating a cash buffer to help deal with any upcoming rate hikes. Alternatively, opt for the security of a fixed rate mortgage to you can lock in repayment security.
Risk 3: “The tenants won’t look after my property”
A good landlord's insurance policy can help you sleep easy at night. If a tenant maliciously damages the property, your policy will cover you for repairs and loss of rent while the damage is being repaired. It’s a worthwhile tax-deductible investment and it provides invaluable peace of mind.
Until next time, happy investing.
About Helen Collier-Kogtevs
Helen Collier-Kogtevs is a bestselling author, educator, speaker and property investor. Her passion for wanting to make a positive difference to people’s lives, inspired her to create mentoring programs that teach people how to retire on $100,000-plus with 10 properties in 10 years or less.