Protecting your Investment Property

Are you a ‘glass empty’ kind of person? When you think about buying an investment property do you worry about everything that could go wrong? Worried about the next flood or cyclone? What happens if interest rates go up? or I lose my job? or I get bad tenants?…

Don’t let your fear get in the way of your investment strategy! Brisbane’s Buyers Agency, Your Property Hound looks at some of the most common risks and strategies to protect your investment!

 

Nature’s Fury!

You cannot prevent the next flood, fire or violent storm but you can take steps to minimize the risk to your property (and back pocket!).

  • Having comprehensive building insurance in place is of utmost importance for any investment property. Check the terms and conditions of the policy to understand exactly what you are covered for.
  • Where possible, buy properties located in low-risk areas. For Brisbane property purchases make sure to check the council website to ascertain the risk of river or creek flooding, or storm surge. Also check for any bushfire overlays on the property.
  • Prepare your property for storm season (https://www.stormwise.com.au)
  • Have smoke alarms installed at your property and make sure that they are compliant with the latest regulations. (https://www.yourpropertyhound.com.au/investment-property-comply-new-smoke-alarm-laws/)
  • Make sure that all electrical wiring at the property is in good condition and installed by a licensed electrician to avoid the potential of fire caused by faulty or old wiring.
  • Have your property inspected for termites on an annual basis. Consider installing a physical or chemical termite barrier installed around the property.

 

Tenants from Hell

Investors often worry that tenants will damage their property and stop paying rent. Fortunately these events are uncommon, and investors can take simple steps to protect themselves.

  • A landlord insurance policy will safeguard investors from malicious damage to property and unpaid rent.
  • Employ a reputable property manager to perform background checks on prospective tenants; perform regular inspections of the property; and follow-up on any unpaid rent.

Rising Interest rates

Buyers have enjoyed record low interest rates for a number of years but will this continue?

  • Investors should take into account possible rises in interest rates when they perform their cash flow analyses and have a plan (and buffers) in place should interest rates increase.
  • Purchase your property in a suburbs that has as a low vacancy rate, and make sure there are no major residential developments planned for the area in the coming years.
  • Maintain your property to ensure it remains appealing to renters. A fresh coat of paint and new carpets will help to maximize your rental income, reduce periods of vacancy, and therefore to make rises in interest rates easier to manage.

Falling property prices

The best insurance against falling property prices is to buy wisely and adopt a long term strategy. It is important to seek independent advice from a licensed buyers agent before committing to any property purchase. A reputable buyers agent will:

  • Educate you about the fundamentals of an area including current and planned infrastructure
  • Advise you on the supply and demand for property in your chosen area
  • Perform detailed due diligence on any properties of interest
  • Make sure that you are securing the property at the best possible price.

Loss of employment

Could you afford to keep your investment property if you were to lose your job?

  • Make sure you have income protection insurance in place to provide a regular income stream in the event that you become unable to work because of illness or injury.
  • Always maintain a cash buffer to help cover your mortgage repayments (or any unforeseen expenses) for a period of time that you are comfortable with. (At least 60 days would be recommended).

 

Purchasing an investment property is a major financial commitment so it is important to aware of the risks involved and how to protect yourself and your investment. Fortunately there are strategies to minimize these risks so that you can purchase with confidence (and still sleep soundly at night!).

 

If you require help finding an investment property in Brisbane not hesitate to contact the team at Your Property Hound Buyers Agents – we’re happy to help!