TOP 6 PROPERTY INVESTMENT FAQS AND THEIR ANSWERS

TOP 6 PROPERTY INVESTMENT FAQS AND THEIR ANSWERS

1. What if I can’t find a tenant for my property?
Take a moment to look at the facts here. The vacancy rate in Melbourne is approximately 3%, meaning that for every 100 properties, only 3 are vacant, whereas 97 are rented out. A 3% vacancy rate is indicative of an equilibrium market. 

The solution here is to select a location with high rental demand and an existing shortage of rental properties. Additionally, you can also opt to reduce your rent by $5 – $10 per week to attract tenants to your properties over others within the area.

2. What if I have bad tenants?
Take a moment to look at the facts here. The vacancy rate in Melbourne is approximately 3%, meaning that for every 100 properties, only 3 are vacant, whereas 97 are rented out. A 3% vacancy rate is indicative of an equilibrium market. 

The simple answer here is to source landlord insurance protection. This will cover you for any of those daunting “what if’s” and will ensure that you are not personally responsible for any incurred costs. You can also avoid these risks by buying properties in reputable areas and having a reputable property manager to screen potential tenants during the initial application process. You should furthermore minimize any physical risks to your property by obtaining building insurance for any potential issues such as rain damage, fire and electrical faults. 

3. What if I lose my job?
Make sure you always have a financial buffer. This buffer should ideally be between $10,000 -$15,000 in order to effectively cover you during any unexpected circumstances or prolonged periods without a consistent income.

4. What if interest rates rise?
Investing in property is a long term strategy, meaning you should hold on to your property for at least 10 years in order to reap the biggest rewards. During these 10 years, your interest rate is sure to go up and down – this is simply the nature of the market. When interest rates rise, this doesn’t affect the investor so much, but rather the owner-occupier. As an investor, you will get more tax back to cover the interest. If you have any concerns about rising interest rates, be sure to contact your bank regularly to ensure that you are always informed of any repayment changes.

5. What if the market collapses?
Before investing, it pays to fully understand property cycles. Historically, well-selected residential properties will double every ten years. During this ten year cycle, properties may rise, stabilize or lower, then likely repeat the same cycle over and over again. Typically speaking, residential properties have only ever corrected themselves.

The key is to buy, hold and never sell – Remember, investment is a long-term strategy.

6. What is the risk of retiring broke?
Statistics show that only 7% of Australians own residential investment property, indicating that most people do not invest due to simple procrastination or fears of debt.  

For many people, the biggest fear of growing older is retiring with no money. This is a very understandable fear as statistics also show that, for the average Australian who has worked for 40 years, 95% will end up broke and only 5% will find themselves living financially “free”. 

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