Property Investment Advice: Current Threats To Investors

If you are a property investor, there are some threats that could affect your investment and your financial future

. Its important to be aware of them so that you can protect yourself.

The first major threat is of unemployment in vulnerable areas. If you own properties in weak areas with a high dependency on government jobs, this could have a detrimental effect on both the rental value and the quality of your tenants. Therefore, make sure you buy in good, high quality areas and avoid depressed areas. Property may be cheap, but you will suffer in the long run.

Second is complacency towards high leverage. Dont borrow too much against your asset; this could be your downfall and the end of your investment career. Many investors do not have a lot of flexibility because they are highly leveraged but the problem is that they have no room to maneuver and if they had to liquidate their asset, they would need genuine equity so that they could sell regardless of falling values.

The third threat is having just one strategy. This makes investors very vulnerable with no flexibility. The ideal scenario is to have a combined strategy of trading, developing and investing. The key here is 3-2-1 out of 3 deals, trade two, keep one. Investors can make cash by trading then use their own money to invest and with a bigger income, they are less likely to be affected by rate changes. This way, they are no longer solely reliant on rental income and will stay afloat in troubled times.

The fourth threat is the change in rental demand. As this current housing crisis unfolds, the population swells, the courts will be reluctant to evict bad tenants. As demand rises there will be more cases for homelessness, which is on the rise in the first time for years, and as the economy contracts this will rise further. As the situation gets worse, the government will place pressure on the courts not to evict tenants.

The fifth major threat is interest rates and the financial freedom dream.

The key here is to pay your debt down as quickly as possible. The only way to be financially free is to have property that is unencumbered, so you need to pay off your mortgages as soon as possible.

If you are aware of the threats, you can start planning for the future and you wont be caught unawares when rental values fall, interest rates rise and your tenants stop paying your rent.

If you would like property investment advice, get in touch with Paul at http://www.paulribbons.com.

by: Paul Ribbons

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