When it comes to looking after their investment property, most people would agree that they would never knowingly take risks that could jeopardise their success or achieving their goals. But what if you were actually exposing your portfolio to threats without even realising it?

Check and make sure you are not facing any of these big risks when it comes to your property.

Your investment property falls in value

Sometimes investors have to buy at the top of the market - otherwise they may be left out of the game for years. But what happens if you pay top price, and then not long after, values start to drop.

It can be a hard pill to swallow, but there are a couple of ways you can mitigate this risk. Firstly, try not to buy in an area where prices are inflated due to a competitive market. But, of course hindsight is 20-20, so if you already have the property, just try to hold on to it as long as you possibly can, and remain hopeful that long term you will regain any losses you may experience.  

You have bad tenants

This is one of the most risky parts of owning a rental property, as there are any number of ways a bad tenant can affect your ROI and undermine the potential income you were aiming to receive from the investment. From damaging the property, to not paying rent, or even worse - using the house as a P lab  - these types of things can be extremely costly and difficult to recover from.  

It is critical you always do your due diligence before approving anyone to be a tenant in your rental, and it is highly recommended that you have a professional property manager who can take care of any potential issues before they get out of hand.  

You don’t have the right insurance

It must be said that not having insurance for a rental property is a huge liability. Above we mentioned the issues that can come from having the wrong tenants, but there is also the fact that sometimes, accidents happen, and if anything serious was to happen to your investment, how would you be able to replace it or recover costs?

Getting insurance can be a complicated process, but it is critical to understand what you do and don’t have cover for, and make provisions for any particular risks out of the ordinary. Apartments require different insurance from standalone properties, and you also need to consider natural disasters, as not all policies automatically include this.  

Read more: 5 of the best kept secrets for successful property investment

You don’t understand how to achieve your goals

It is one thing to buy a property to supplement your income, it is another to actually have a plan on how to achieve investment goals - even if they are simple targets of earning a certain amount of money by a particular date.

Believe it or not, it is very risky to not have an idea of what you want to get out of your property, because without this understanding you will be less likely to have a firm grip on all the other aspects of owning a rental investment - like vacancy rates, rental yield vs capital gain, negative gearing and depreciation.  

Long vacancy periods

Finding the right tenants can sometimes take time, but anytime your rental property is vacant, you are effectively losing money.

Aside from there not being a lot of demand for accommodation, there would probably two reasons your investment is left for a long period without tenants - either your standards are too high, or it isn’t a very attractive offering for those in the market for a rental. Once you work out what the main issue is, ensure you remedy it as soon as possible.

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