Understanding The Risks Of Property Investment

Risks Of Property Investment

While there are quite a few worthwhile investments to consider, one that has remained an appealing option throughout the ages is property investment. Even though purchasing properties to rent them for a profit or alternatively, improve them to turn over a large profit is often considered a great investment in comparison to investing in startups and other investment types, property investment is not without its risks. In the event that you have decided to purchase property to enjoy the potential profits associated with renting, here are a few risks for you to consider.

Eminent Domain

Eminent domain is often not a risk that many property owners consider as they assume the chances are relatively unlikely. However, in the event that the government uses eminent domain to claim your property, you may have to sit with a significant loss of investment despite compensation. To ensure you are always as prepared as possible for this type of situation, it would be best to consult with a reputable Law Firm regarding your rights as a property owner and how to best handle the situation should it arise. Relying on legal advice will ensure you are able to enjoy peace of mind in knowing you are on the right side of the law while investing in property.

Vacant Rentals

Another overlooked risk of investing in properties with the intentions of buying to let is that your rental property may be vacant for an extended period of time. Unfortunately, there is hardly any way around this risk as properties can stand vacant for various reasons. However, by purchasing properties in good areas and ensuring you keep the home well-maintained, you will be reducing the risk of your property being vacant. You could also employ a rental agency to ensure you have paying tenants residing on your property as often as possible and for a longer period of time.

Damage To Your Property

Tenants damaging your property is a risk you simply have to consider when investing in buy-to-let homes. While rental agencies will perform screening of potential candidates, you will still have to consider the risks. In the event that tenants damage your property, it will be your responsibility to conduct repairs and renovations to restore your properties value. However, you could consider insisting on a relevant deposit amount to be paid prior to tenants moving in. In addition to this, you could also stipulate in the rental contract the rental agency or yourself as the owner of the property will be conducting regular home checks. This will ultimately help you note damages as soon as possible and take legal action against your tenants where applicable.

Rental Arrears

It can be an extremely costly concern to confront a situation in which your current tenants are in arrears with their monthly rental. You will need to seek legal advice in this type of situation as rental laws vary according to the region. In some cases, evicting tenants for non-payment may be significantly more challenging, which means you may ultimately run at quite a loss.

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