Income property can be very financially rewarding and create many tax benefits for the investor. However, it’s important to be upfront about the risks associated with property investment before you make any commitments. Matthew Scott can help you understand what you’re getting into, the risks that are out of your control, and how to make the safest investment possible!
What Are The Risks Associated With Property Investment?
Income property investment is like any other type of investment: it has its own set of risks. Some common contingencies for real estate include:
- A decline in the market: The market can be volatile, and the value of your investment could fall below what you paid for it. This can leave you paying a mortgage that is greater than the current market value of the property.
- Speed of sale: If you work alone and off-market, you could have a tough time selling the property. This is especially true if the local real estate market is going through a period of decreasing prices and/or low sales. Just selling and completing the closing on a property can take several months, and you should account for this when investing money. If you don’t, you could find yourself with a severe lack of liquid assets.
- Tenancy risks: If you purchase an income property to rent out, you could end up with a tenant damaging the property or not paying the rent. It can also be difficult to find a tenant, and your investment could stand empty at this time. You are also responsible for paying the mortgage and property taxes while maintaining the property.
- It’s a big financial and time commitment: When you’re getting into it, Income property ownership is an expensive and time-consuming investment. New investors have to prepare to devote a lot of time and energy to managing the investment. This includes handling the paperwork, finding tenants or buyers, and making the necessary repairs. These are all things you have to do whether or not the property produces any gains for you.
Know The Risks
It’s important to get the right advice. If an advisor or financial institution doesn’t tell you about the negatives, you shouldn’t trust them. Being upfront about your expectations, both good and bad, is how a solid financial and investment strategy is developed. Potential investors should know what the top interest rates are, the outlook of the market, and smart management strategies. They should also be able to manage all the paperwork and understand local taxes and by-laws before beginning any renovations or new construction.
Schedule a Consultation
If you’re a new investor worried about the risks, Property Investment Guru Matthew Scott can help you assess the financial commitment involved to make sure you have a plan that fits your exact needs!Contact Us