Hope you are enjoying this series about managing your risks when buying a property.
The next risk stops potential property investors dead in their tracks: Interest Rate Rises!
An interest rate rise is one of the things that property investors fear most. If you aren’t prepared, you may have to sell some properties just to get by. It doesn’t have to be this way though.
If the fixed interest rate is low enough to fix your payments and maintain a positively geared property, it could be worth considering this option. If you can fix your interest rates for 5 years, it may not end up saving you money (because the variable rate is usually lower), but it will give you more confidence and a safety net for that period of time.
Once again, if you maintain a positively geared portfolio and keep a sufficient cash buffer in an offset account to deal with unanticipated extra expenses, an interest rate rise won’t sink you. You just need enough of a cash buffer to maintain your portfolio over time. Interest rates may rise, but so will your rental rate.
If you want more information please reach out to my team at 1300 372 677 or firstname.lastname@example.org.
Please join me for the 5th risk to manage – Bad Tenants.
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