Hello Property Investors!
It’s safe to say that there will always be some risks involved with buying an investment property. It should not stop you from investing because there are ways to prevent, minimise or manage the risks should they occur. You can eliminate any risk by simply not doing the activity. But if you do that you will get NOTHING. This series will outline various risks and how you can prevent or manage them.
The first Risk is a Decrease in Property Value.
There are a few strategies to prevent the risk of a property declining in value. The first rule is to only buy in major population centers. These areas are always going to be needed and are always going to be around. Avoid mining or smaller towns as these places often have a much greater price swing. It only takes one small event and the entire region sees its prices drop.
The second rule is to look for diverse economies. This means there will be some resilience in the market. You don’t want the entire market to collapse because a single industry closed down in that area. You also want to see increasing demand in an area that will pressure prices upward. It should be somewhere people want to move to. If people are leaving an
area, then you can guarantee that house prices are going to go down too.
Check-in for our next risk to manage – A decrease in Rent Return.
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