PROPERTY INVESTOR'S SURVIVAL GUIDE

Investing in property involves risk, as with all other asset and investment strategies. This can be particularly obvious during a market low. It is therefore impetrative to have a strategy in place to turn to when it is needed.

Below are a few tips on what to do when such situations occur.

 1. YOUR PROPERTY LOSES VALUE

 If you find that your property is losing value you must decide if you should sell up now or hang on until the market picks up again. Even if you have negative equity it is better to hang onto the property rather than selling it when the market is low. Buying and selling quickly is a costly business as agent fees, stamp duty and loan costs can fast drain your profits.

 2. YOU LOSE YOUR JOB

If you lose your job you will find it has an abrupt impact on your borrowing capabilities and your ability to start or continue your property profile. You may find that even if the rents have increased and you are finding you no longer are having to put money into the property, you would struggle to be able to afford your own loans and personal expenses should the property become vacant.

If this does occur it is crucial you contact your lender immediately. They will advise you if you can get a “payment holiday” from your current loans, if you have made additional payments you may be able to have a break in payments for a few months.

 3. YOU HAVE TENANT TROUBLES

Getting landlord insurance is a great way to protect yourself from troublesome tenants.

Landlord insurance is there to protect landlords from tenants who damage your property, leave without paying rent or stay in your property without paying. It can also protect you from unexpected accidents or acts of nature that cause damage to the property forcing tenants to move out.

If you have landlord insurance always be aware of what the insurance policy covers you against, and the excess you would need to pay in the event of a claim.

Good landlord insurances should protect you against:

• Landlord’s legal liability
• Malicious and accidental Building damage
• Content insurance both malicious and accidental
• Loss of rent from a tenant
• Drug associated damage

4. LARGE MAINTENANCE COSTS

Although you can’t avoid any unforeseen costs it is suggested that for each investment property that you own you hold a safety fund. The amount will depend on the type of dwelling for example if you have a 2-bedroom unit in a strata complex you might set aside $2000 for the year in costs however if you have a house it might more be around the $5000. These funds can be held in the trust account by your property manager or even better keep it in an interest-bearing account. If you don’t need it, at least it will be earning you interest.

5. DO THE REPAIRS

Understandably doing repairs are not a fun chore but often when property owners neglect their maintenance they can end up with larger costs in the long run. An example might be not having a tree trimmed, if not dealt with it can end up growing into the eaves and causing issues for the guttering. Next downpour you will have water coming into the house.

When owning an investment property, it can be daunting however with the right methods in place it can set you up for a strong financial future. Which is why it can be a good firm investment.