The 4 Perils of Property Investment

Property investment is a double edged sword: On the one side there’s the clear overriding benefit of investing, which was best articulated by US President Franklin D Roosevelt when he said:“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”

But as simple as it is to be drawn by the appeal of developing a property investment portfolio, there are a number of pitfalls faced by every person venturing into this arena.

This blog post will look at the 4 universal challenges faced by every person considering property investment, and look at the one thing you can do to avoid being caught out by them.

#1 Finding quality investment properties

The first pitfall lies in choosing the type of property you’ll invest in. This is no small task, given that there are several types to consider, including:

• Commercial properties – e.g. office buildings that can be leased out to companies
• Residential properties – e.g. flats, student houses, holiday get-away cottages etc
• Retail properties – e.g. shopping centres or retail shop fronts
• Industrial properties – e.g. storage units, car washes
• Mixed-use properties – e.g. a property that is a combination of any of the above

And within each type there are subcategories that each require years of knowledge, experience and expertise just for you to be able to spot the quality investment opportunities.
Thankfully there’s a solution: Build a team.

Your team will consist of experienced real estate investors, commercial investment mortgage brokers and other financial advisors who will work with you to help you find properties to grow your portfolio.

#2 Financing investment properties

It’s one thing to find a property to invest in, and quite another to find the financing for this property.
The range of financing can be anything from a few hundred thousand to a few million, depending on the type of property you’re investing in.
This is where your teamcomes in. They will be able to look at your financial details, as well as the details of the property, and help you successfully navigate the intricate landscape of commercial mortgages to find the best deal and the money you need for the investment opportunity you’re considering.

#3 Managing your investment properties

A critical component of investing in properties is real estate management. Going back to the Roosevelt quote, it’s important that the properties you invest in are “managed with reasonable care”. Developing or partnering with a property management team will enable you to get a maximum return on your investment without the headaches of having to personally respond to all the day-to-day demands of running a property. This gives you the freedom to manage your investment portfolio rather than being managed by it.

#4 Maintaining income streams from the property

This pitfall is one of the trickiest, and most crucial to navigate. That’s because the primary source of your property’s income streams will be rental, and thus heavily dependent on the tenants using your property. Issues like credit ratings, proper references and comprehensive tenant profiling become crucial here. And having a team who is able to carry this out, as well as oversee the continual occupancy of the property is critical.

A 4-letter word beginning with “T”

By now you’ve probably spotted the theme of this article, which is the importance of having a team. Your team of property managers, experienced investors, commercial investment mortgage brokers and other financial advisors will help you successfully navigate each one of these 4 pitfalls.

And so whilst property investment still remains a double-edged sword, your team will help you wield it, and not fall on it.


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