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Risk management is vitally important in any sort of investing, and that’s the case for property investment as well. There are a variety of matters to consider in your risk management.

Risk management is vitally important in any sort of investing, and that’s the case for property investment as well. There are a variety of matters to consider in your risk management.

• Will the property be tenanted most of the time?

• Will the tenants pay their rent consistently and on time?

• Will the tenants cause abnormal damage or trash the property?

• Will the tenants cause problems in the neighbourhood? How will that impact on getting new tenants?

• If you have problems with the tenants, will you have difficulty in getting them out?

• Will the tenants or their guests be injured by something that should have been rectified by you?

• Will the property suffer damage from fire, weather events or vandalism?

• If the property is damaged, will it be able to be repaired quickly to allow it to be tenanted again? How much rent will be lost? Will there be expenses related to the contract with the existing tenants if they are forced to move out and get other accommodation during the contract period?

• Will rents for the property experience a good level of growth?

• Will the property value increase over time at the expected rate of growth?

• Should unforeseen circumstances cause you to sell your investment property quickly at a time when markets are down, could you get out of it and still cover your costs?

Some of these risks can be managed by having a good rental property manager looking after the investment property. Checking references and having a rigorous application procedure and ongoing inspections are of utmost importance. Other ones have to do with a wise selection of the investment property itself and appropriate level of gearing. Then there are risks that can be managed by landlord insurance. This is another essential in risk management for most people involved in property investment.

Landlord insurance in property investment

One of the things that you certainly want to have in place with your investment property is landlord insurance. Normal building insurance for a home generally doesn’t include carpets or curtains. Those are typically covered under your contents insurance, and you probably will not have that for your rental property. Additionally, most ordinary home building insurance policies don’t cover you for damage done by a person that you have invited into your home. That would include a tenant. Furthermore, should disaster strike or your tenant trashes the place, you are going to be out of pocket for the lost rent while the place gets fixed, even if the insurance company is covering the cost of repairs. That can also be a part of landlord insurance.

When you have signed a contract of sale, you have obligations to purchase the property. It’s good to have your insurance in place as soon as the contract is signed so that you are covered should anything happen to it prior to your taking possession of it.
In light of the need for proper risk management, landlord insurance is vital.

More information about property investment

A free eBook is available which discusses these matters and a whole lot more. Click here to get your free copy of Property Investment.

Loans for property investment

If you are involved in or are considering property investment, give the friendly credit managers at State Custodians Mortgage Company a call. They are very experienced in providing the finances for such an investment and will be very helpful to you. Call today on 13 72 62.