Property Investment Strategy: Low Risk
How can you safeguard your investment?
No investment is risk-free but a well-planned, low-risk property investment strategy that includes measures to safeguard your initial outlay can help you secure a healthy return on it.
Some of those safeguarding measures include:
Comprehensive property surveys provide you with a detailed overview of a building’s state and alert you to any potential problems or repairs that need to be undertaken to make the property habitable, saleable and most importantly, profitable.
Having a thorough survey allows you to protect your investment from unnecessary expenses, gives you a strong point from which to negotiate the purchase price and allows you to calculate the potential yield so that you can make an informed decision about whether the risk is low enough to secure your investment.
A large tenant pool and a desirable area will help to ensure that your return is consistent and unaffected by periods of vacancy.
To secure a regular income, it may be worth incentivising tenants with slight rental reductions or a cash incentive on completion of a long-term tenancy agreement with the proviso that rent is paid on time and the property is well maintained.
Having a reliable rental income allows you to manage your cash-flow and redirect funds into additional low-risk investments when opportunities arise.
The aim of any investment is to secure the highest yield possible and to achieve that, you need plan and manage your finances in detail.
In the simplest terms, it’s essential that any rental income you receive covers your costs with a healthy profit margin. When you become a landlord those costs may include:
- Mortgage Repayments
- Gas Safety Certificate
- Energy Efficiency Certificate
- Tenancy Deposit Scheme
- Landlord Insurance
- Tax on Rental Income
- Repairs and Maintenance
Additional costs may include Stamp Duty, legal fees, Capital Gains Tax and furniture if you plan to let a furnished property or utility bills and council tax if you want to include them in the rent.
Some of these costs are tax deductible so it’s important to have a clear understanding of your finances before you commit to any investment.
When the financial structure of your property investment is clear, you’re in a better position to decide whether to release any equity it and expand your portfolio; spreading your investment over several rental properties is often less risky than tying it all up in one.
No matter what kind of property investment strategy you follow, regular reviews of its performance are vital to ensuring that your risk remains low, that your investment is protected and that it continues to give you the return you want.
At National Property Portfolio, we provide investors of any size portfolio with market advice, planning assistance and management expertise to control risk and secure the best possible return.
To find out more about how we can help you to implement a low-risk strategy and safeguard your property investment, contact our team of professional advisors directly on 0800 321 3975.