Whether you’re an experienced or novice property investor, there are always risks involved when acquiring property and expanding your investment portfolio. It’s important to understand that, unfortunately, there are no tricks to this trade! Investing isn’t about secrets or magic, it’s about tried and tested techniques, education, mentorship, planning and hands-on hard work!
Diversifying Your Portfolio
Investors have to get out of their comfort zone when considering the geographical location and structure of their future property. If your investment portfolio lacks diversification, you could be missing out on a crucial risk mitigation strategy. When considering your next purchase, look at investments that differ in both location and format from your current assets.
Choosing Your Experts
It is always advised that clients contact and consult with their financial adviser, broker, lawyer or accountant before making any investment decisions. Choosing these trustworthy mentors can be a difficult process, and it is important that you do not use price as an indicator of the level of service provided. It is recommended you consult with a variety of potential adviser’s, broker’s or accountant’s before choosing one you are both comfortable with and confident in.
Considering Your Purchase Structures
It’s often forgotten that there are a number of legal structures available when purchasing property. Choosing the right structure can increase profit and assist you in the future. Your investment goal will dictate whether an individual, partnership, company or trust structure is chosen. If you’re looking to minimise your tax and to protect your assets then you may want to consider purchasing in a company or trust structure. If you’re interested in engaging in a joint tenant arrangement, then you may need to consider the legal consequences associated with half the input, half the control, and half the gain.
If you haven’t employed a property manager to oversee your property and its associated market, there is a possibility that you could be undercharging your tenant. Ascertaining a fair market price requires constant research into the local market. If you’re not confident, perhaps consider hiring a property manager who can provide you with tips on how to push that rent to the highest possible fair price. Utilising property managers also ensures investors don’t lose money via false economy. It is very common for investors to hold out for the most rent and fail to accept a tenant. This short-term thinking often damages income in the long term.
It isn’t easy – but it is worth it! Property investment can be a lot of fun if you work hard, and surround yourself with the appropriate level of professional support. Have fun exploring and diversifying your investment portfolio!