These risks are not outlined to discourage people from investing in property. These are REAL scenarios that can happen ONLY if you purchase property hastily, or without due diligence. Like all investment types, property has its risks but can be avoided with appropriate advice from certified financial planners and understanding of the market.
Here are the 6 risks you should be aware of when investing in Property:
Property transactions take longer than shares. Unlike shares that you can just sell anytime, property takes time. When selling property, be aware that you need time to get the best value; otherwise, you may be forced to sell at a lesser price.
Getting in and out of property can be costly. Entry and exit costs can cost you thousands of dollars, so this strategy should be well thought.
Vacancy hits your cash flow hard. Losing tenants in your investment can cripple your cash flow. Selecting tenants before occupancy is crucial, so read through these tips on how to have good tenants for your investment property.
Interest rate hikes. Your repayments can be greatly affected by the increase in interest rates, so always have a contingency plan if that happens.
Purchasing the wrong property. This is a crucial risk that you should be willing to take. Properties that are bought at the wrong time or wrong area can affect your vacancy, ultimately your cash flow.
Financial changes can affect your mortgage payments. Losing a job can cause you to lose your property as you will be unable to meet your mortgage repayments.
Read more about this on the Your Investment Property website