Five Property Investment Challenges

Property investment is a profitable venture, one with amazing opportunities for investors. However, like most investments, property investment comes with its whole challenges and risks. These challenges can affect the profit made by an investor, while affecting future investments. Most of these challenges can be avoided if you make the right decisions on your investment property. This article highlights five property investment challenges that you might face as an investor.

Five Challenges Faced by Property Investors

• Long Term Outlook: One of the major challenges that property investors face, comes with the long-term outlook of the property. The value of some properties fluctuate, thereby turning out to be a poor investment if it is sold at the wrong time. Buy properties that can give you value for your money in the long term. The best way to do this is by buying properties at a discount as it will guarantee you equity when you sell. Doing this will help you to deal with any short-term drop in the value of your property.
• Void Periods: This is one challenge that most property investors are unable to avoid. Void period refers to the period of time in which there is no tenant on your property. The time gap between an old tenant vacating the property, and a new tenant moving, make up the void period. Void periods are usually very costly for property investors, as they cover all the bills on the property, without making money from it. These bills that include council tax and mortgage repayment are typically on the high side, making void periods difficult for property investors. The best thing to do, is to make your property attractive, such that it is a top choice for all tenants. Also, set aside a budget to cater for the expenses that come with void periods.
• Interest Rates: The interest rates on properties can also be a challenge for property investors. This is why it is important to make plans in expectations of an increase in interest rates, as well as inflation control measures. To deal with the effect of interest rates on properties, make a budget for increased repayments or try to get a fixed-rate mortgage on the property.
• Difficult Tenants: As a property investor, you are sure to come across different types of tenants. Some of these tenants will leave the property in a bad state that requires repairs and refurbishment. In order to prepare for such events, including a clause in the tenancy agreement, indicates that the tenant must leave the property in good condition.
• Investment Area: The location of your property has a big impact on its value. If the economy of a housing area stops booming, it will have a negative effect on the cost of homes there. This is why it is best to invest in properties, in areas with two or more booming industries.

Conclusion

As a property investor, it is essential that you consider these challenges when looking for where to buy investment property.