How to minimise risk when investing

By Victor Kumar
At the start of most property investor’s journeys there is usually one thing that prevents them from kicking off and that is fear.
Many people may be fearful of property investment because they perceive it to be risky or they are scared of having a large amount of debt.
For others, it’s just that they don’t have the right knowledge or education and therefore their lack of insight makes it seems all the more scary, but of course it doesn’t have to be that way.
We have decades of experience at Right Property Group and over all of those years we have developed winning strategies that also minimise the risks to investors.
Firstly, we always locate emerging suburbs with good fundamentals that are going to achieve solid growth over the long-term.
Next we negotiate properties below market value (LINK TO BLOG FROM LAST WEEK ABOUT UNDER MAKE VALUE) to ensure that our clients are paying the best price possible from the outset.
We are also always identifying areas that are the most likely to obtain quick capital growth, which allows investors to access their increased equity to recycle as a deposit for another property sooner rather than later.
Another strategy we use is to source properties that return above average rental yields, which allows better cash flow for investors and means less money out of your pocket and more into your bank account from tenants every month!
We also minimise the risk to investors by generally sourcing properties at the lower end of the market that typically cost less than $350,000. This results in lower mortgages for the properties as well as the opportunity to duplicate more quickly.
We buy properties around the nation for investors no matter where they live, because we’re always researching which markets are offering the best opportunities. Purchasing properties in different cities is another risk minimisation technique because not all markets are performing at the same rate at the same time.
One of our key strategies is buying at the lower end of the market and there are a number of sound reasons why we do this.
The first is that investors need less cash and/or equity to get started. Typically, they only need about $50,000 to purchase the first property for their portfolio.
Of course, if you purchase a more affordable property, you will also have lower mortgage repayments, which makes it much easier to hold this type of real estate over the long-term to ensure you can grow the most capital growth.
Purchasing at the lower end of the market also enables diversification, which in turn spreads the risk.
We always source properties for our clients that have higher rental returns and aim for yields of at least 5.5 per cent.
Weekly rent for these types of properties are also strong given that there are more renters at that end of the market.
Many of our clients also undertake cosmetic renovations on their properties, which means that its value increases faster. Again, this means that they can withdraw their increased equity early and repeat the process all over again.
While we always advocate that investors hold their properties for as long as possible, there are generally more buyers for properties at the lower end of the market, which means investors can generally sell quite quickly if they need too.
While we use a number of techniques to minimise the risks for investors, we actually don’t believe that property investing is inherently risky. You just need the best team on your side to show you the right way from the very beginning.