Property Ownership Risks

Owning property seems to be the ultimate dream however you should know that once you own property, you own both its good and bad elements. You must now understand that you are a landlord and know how to manage the responsibility that comes with that title. You will also have to bear the risks such as empty buildings and wear and tear of the property.

Vacancy

Empty properties cost you money and reduce your overall returns. As long as your marketing campaign is on target, the supply and demand in the marketplace will determine the rent you receive.

Property wear and tear

Clearly, we would prefer if there was no wear and tear at all! If we didn’t have to spend money on maintenance and upgrading over time, our return would be signi‑ficantly better. But, back toreality...

Minimising wear and tear by choosing the right tenant is the best way to go. Broadly speaking, the fewer occupants you have, the less wear and tear. With my own properties I am happy achieving a slightly lower rent in order to have the best selection of potential tenants.

Sourced from: http://www.smartpropertyinvestment.com.au/opinion/14267-6-things-that-can-go-wrong-with-property-investing-and-how-to-avoid-them

One of the mistakes made by first time property owners is that of not finding out what is currently taking place in the market. You need to understand among other things, the population, economics and infrastructure. One property is not enough if you are aiming for financial freedom.

 Not knowing the fundamentals of a budding market

Property markets don’t operate in a vacuum – they are impacted by a number of things. Unfortunately, most beginners don’t know what they are or how to find them. When you understand what drives a market you can more accurately predict which markets will perform and which won’t.

These are the six key drivers. Look for them in any market you consider investing in!

Population – markets with growing population can often put pressure on existing supplies.

Economics – look for a vibrant economic area with a diverse range of employers, healthy employment rate, and good incomes.

Infrastructure – government and private industry should be investing in the local economy. They will be building roads, homes, businesses, schools and hospitals in growing areas.

Not looking past their first investment property purchase

A single investment property will not give you financial freedom. Rather than focus all of your energy on buying that ‘one perfect property’, think about what you want each property to achieve. With your first property, you want to achieve capital growth as soon as possible, so that you can purchase your second property. Purchase according to the numbers, and have a clear idea of how much capital you’ll need to make your next (and subsequent) purchases.

Sourced from: http://www.yourinvestmentpropertymag.com.au/strategy/10-ways-firsttime-investors-could-go-wrong-and-lose-money-189610.aspx