Why Buying Property IS NOT A Risk-Free Investment

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People will often say that property is one of the best places to park your money. A house will always be there, they tell you, and people will ALWAYS need homes. 

 

But when you look at the data, you soon see that owning property isn’t risk-free. If it were, then there would be no such thing as homeowner’s insurance. 

 

It turns out that investing in real estate is riskier than most people think – something you need to be aware of before you take the plunge and put a deposit down. 

 

Here’s why buying a property IS NOT a risk-free investment. 

 

House Prices Can Fall As Well As Rise

 

Despite what the pundits might say about the property market, house prices can fall as well as rise. Over the last twenty years, we’ve been lucky. House prices have gone up in value continually over time, outpacing increases in wages. That trend, however, could come to an end at any point. All it takes is for global interest rates to rise and mortgage costs to go up, and it’s game over for the market. Prices will fall back to their historical trend, and that will be the end of that. 

 

Flooding Can Damage Your Property

 

With rising sea levels and increased rainfall, the risk of water wrecking your real estate investment portfolio is higher than ever before. Companies for home flooding have never seen so much business for their services. 

 

In the past, a lot of builders constructed properties on floodplains. In a world of normal levels of rainfall, many believed that as the sensible thing to do. Flooding was a remote possibility. With increased urbanization, surface run-off, and deforestation, that’s all changed. Flooding is now an issue up and down the country, with several instances already this year. 

 

Flooding doesn’t just wreck the furniture. It can get into the walls and foundations of a property. Once it sets in, you need a professional to remove it. If you don’t, you inevitably wind up with patches of black mold everywhere – and you certainly don’t want that!

 

Your Maintenance Bills Could Go Through The Roof

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Average property prices continue to rise, but homes themselves are depreciating assets.

 

Why? 

 

Because they require maintenance. If you didn’t clean out the gutter, replenish the exterior paintwork or replace the boiler, your house would soon fall into a state of disrepair and start losing value. Properties need upkeep to maintain their value. 

 

For most homes, upkeep tends to average around 1 percent of the value of the home per year. So if you have a $200,000 property, expect to spend about $2,000 on maintenance. Some years will be higher than others. 

 

Some property owners, however, can get unlucky for one reason or another, and their maintenance bills can shoot through the roof. 

The biggest culprit is asbestos. Removing the lung disease-causing material is expensive. The second most significant issue is dodgy plumbing. Cracked pipes that burst can set you back thousands of dollars in repair bills.

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Growing Your Property Portfolio in the Best Possible Way

Property is one of the safest markets to invest in if you have the money to do so. This is why so many people every year are looking at the ways in which they can invest in property or real estate, and start making serious money. But, if you are new to this process, it can seem pretty daunting, especially with the sums of money that are being talked about. 

 

Make sure you think about the different ideas you’ll need to consider if you want to get involved in the world of real estate. Growing your property portfolio is one of the key things you are going to need to consider, and this is something you can work on right now. These are some of the best things you can do to achieve that, and you should use these ideas to help grow your portfolio. 

 

Diversify

 

One of the key things we would recommend would be to make sure you aim to diversify as much as possible with your portfolio. There are a lot of things that play a part in the process, and this is going to help you when it comes to making the most of your property portfolio. This means looking to invest in things like mobile homes as well as traditional apartments and houses. This is a great way of attracting more people and giving you a more unique edge to your portfolio. 

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Rent Out for a While

 

When you are getting involved in the world of property investment, you will generally have two choices; you buy a property, fix it up, and sell for a profit, or you buy and then rent for a while before selling. Renting is a good way to build up your portfolio because it is providing you with passive income on a monthly basis, and this is important. Make sure you do what you can to make the most of this and try to rent out several properties at the same time, so you increase your cash flow. 

 

Maintenance & Upgrades are Key

 

Maintaining and upgrading your properties is also really important when looking at how you can grow your portfolio. Just because you own a property doesn’t mean you can overlook basic improvements. Saving money on home improvements is important, but you definitely need to make sure you maintain and upgrade the properties as much as you can. This can make a massive difference to making your portfolio more appealing to prospective buyers and tenants. 

 

Cash Flow!

 

Cash flow is one of the most important things to consider here because, without money, you can’t purchase property. As we suggested earlier, renting is a good way of bringing in some cash flow, but you need to consider other ideas as well, such as buying positive cash flow property and coming up with side-gigs to help you supplement your income. 

 

As you might imagine, creating a strong and diverse property portfolio is a challenge, and this is something you need to make sure you consider as much as possible. There are a lot of factors that play a part in helping you achieve success in the property market, and these are some ideas that will help you to get started as much as possible.

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