How to Manage Risk
“Profit is the return to risk” and so no investment choice is 100% foolproof. The key to investing safely is to identify and manage the risks.
| RISK | FACTORS | MITIGATED BY |
|---|---|---|
| AQUISITIONS | Property cycle Demographic profile Rental demand Supply Investment in local infrastructure Economic conditions |
Due diligence |
| FINANCIAL | Out of pocket costs/lifestyle Tax implications Credit availability Valuation |
Do not over commit Build in a contingency Insure (LPI Building & Contents, income) |
| MANAGEMENT | Choosing and keeping a tenant | Agent selection LPI Leaseback Guarantee |
| EXIT | Cycles CGT |
Delay exit until appropriate point for tax and cycle Choose property that maximises market share (median price points) |