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Your property investment survival guide

Posted by Paul Wilson

Even though property investing is generally considered to be a safe option, investing always carries a risk.

And while there will be rocky times throughout any journey, don’t let fear and panic drive your decisions.

Put yourself in control and equip yourself with the tools you need to succeed in property.

Here are a few strategies to overcome some common setbacks you might experience along your journey…

You fall pregnant

A pregnancy (surprise or planned) can throw a spanner in the works when it comes to making your repayments.

The loss of one income means you’re more restricted in your ability to service your loan.

The key here is to ensure you have the right type of investment property – not one that’s costing you too much to hold.

I met with a couple this week who were struggling with one of their investment properties.

The property only cost them $180,000 to purchase, but has had very limited capital growth and a low rental income. The body corporate fees and rates combined were pushing $6,000 per year.

They were also planning on having a baby soon and weren’t sure what they could afford to do.

In their case, the best way to eliminate the cash-flow drain was to sell the property. I then helped them readjust to become more financially efficient and cash-flow ready to buy more suitable properties.

Not only did their affordability improve, but the negative experience in owning the wrong type of investment property was alleviated.

They are now in a position to buy properties that make a positive contribution to their yearly cash-flow and also their future wealth creation goals.

They are now looking forward to a much brighter future.

If you are planning on having a baby, you can still successfully invest. You just need to have the right mix of well-performing properties in your portfolio.

And you also need to be sensible.

Being sensible with your spending can help mitigate other risks while on one income, like increased interest rates.

If you’re a couple about to go down onto one income, you need take a look at your spending and see where you can reduce it. 

There are many ways we can retain more of our hard-earned money simply by reducing some daily lifestyle habits. For example: not buying coffee and lunch out or reducing your expenditure on luxuries like new clothes and shoes.

You also need to enquire about the government’s maternity leave policy and the policy at your workplace.

You have accumulated debt or you constantly misappropriate your weekly cash flow

Debt can sneak up on you. If you don’t have a proper budget in place, you can easily accumulate debt almost unknowingly.

Whether the debt is from a big overseas holidays, a little too much dining out or being careless with your spending, servicing your loan will be tricky.

The first step is to identify your cash flow and identify how much debt you have accumulated. Then you can create a budget.

Like in the pregnancy example above, look for areas where you can make a few adjustments to your spending.

Do you really need that brand new four-wheel drive or can you get by with an older model sedan? Do you really need those three credit cards with such high limits?

Some simple adjustments can go a long way to getting your debt down quickly so you can keep building your portfolio.

You lose your income

There are a number of reasons why loss of income can occur, the most obvious being illness. If you or a close family member becomes ill, a significant burden will be placed on your shoulders.

Another common reason for loss of income is travel.

Many people want to have their cake and eat it too – which can be done when you plan strategically.

If you lose your income (either elected or not) you should look at reducing the amount on your repayments.

You can even talk to the bank about taking a holiday from your repayments or making your loan interest only for a set period.

Insurance policies such as income protection and trauma and disability protection are also essential.

You’ll be kicking yourself if something happens and you could have received a payout!

These are just a few of the common setbacks that occur along your property investment journey.

There will always be rocky times along a 10 to 15-year journey and you can’t mitigate every risk – but you can reduce many of them significantly.

Talk to We Find Houses about how we can help you on your journey today.

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