You see, nobody knows what will happen in the future. Everything is possible as well as risky. Being a risk-taker in property investing is not always a positive trait to possess. Sometimes it can backfire you in the future especially when you take the risk without doing so much consideration.
However, being too defensive just because the uncertainty of what the future holds won’t make your portfolio grow. Thus, it is better to take both defensive and offensive action to protect as well as grow your property portfolio. Therefore, it will remain strong no matter what the circumstance happen in the future but also won’t lose opportunities to grow bigger.
Avoiding severe losses from the unexpected future
It is safe to say that even after doing so much precaution from the beginning, things can go wrong in the most unexpected ways. The future is never thing you could be sure about anyway. However, surrendering yourself to the risks which can cost you much money is not a wise thing to do either. The right thing to do is to do the best you can in order to avoid severe losses that might happen in the future.
Planning laws are usually changed following the circumstance. After all, the planning law is often changed to make improvement of the local market. A change in planning laws by government is one of the biggest risk investors could ask for.
Those changes could harm your property investment more or less. Therefore, it is highly advised to really know what is going on with your local area especially from a planning perspective. Thus, it won’t be too late to fix things or make adjustment so that your portfolio won’t be affected too much by the changes. You need to find out if there are long-term factors that can affect your property investment in the long run.
Another thing you can do to avoid severe loss due to uncertain, risky future is to make sustainable investment property. You can renovate some parts of your property to increase its value. However, make sure that the renovation will pay off. Only then you can call it as sustainable property.
There’s a lot of ways to make your property more sustainable for the future such as making sure that the insulation function properly. Thus, the bills won’t get skyrocketed. Besides, tenants are more interested to live in property with efficient heating and cooling system because it requires less energy which means cheaper bills to cover. Other things you can do include installing energy-efficient LED down lights, water-saving showerheads, solar hot water system, etc.
Next important thing that can help protecting your property investment from the risk of the future is by managing your capital properly. It is highly advised to not overcapitalize. It is of course not as easy as it sounds. However, you can focus on several points to avoid overcapitalizing include the renovation cost, the value of your property based on the current rents, and the value of property after renovation completes.