7 super ways to lower the property risk

Property management is one of the most daunting businesses due to the inclusion of various risks. Buying or selling a piece of land is a major decision that involves heavy investment so there’s much to ponder before taking any step. Not just property but virtually every investment poses some sort of financial risk.

The study of property market isn’t a snap as one has to look into constant economy fluctuation, political volatility and many other factors. However, an undeniable fact is higher the investment risk, better chances of return or vice versa. Let’s check out several factors connected to property management and how you can lower the risk in a legal way if there is some property for sale in Dubai and you are after.

Liquidity factor

Like stocks, bonds, savings certificates and other liquid assets, such isn’t the case when it comes to real estate. When you’re investing in it, don’t expect conversion into cash promptly. This is why you should be very cautious and take into account every single aspect having an impact on the decision. In case you’ve disbursed in a neighbourhood where high property demand persists, things can be other way around still, immediate liquidity isn’t possible.

Real estate topography

Real estate value usually remains under flux due to several external factors namely social, political and fiscal unsteadiness. Asides this, other demographic aspects like local codes and ordinances, real estate taxes, natural disaster, physical location and layout all pose some sort of land investment risk.

Developed & undeveloped land

By developed property we mean a specific locality that’s civilized and rich with rental and selling options. It mostly involves leasing income, tax depreciation and other financial facts while the biggest risk is tenant not paying timely rent thus complicating the process further. Maintenance on lease property also affects the overall cost while raising risk whether it’ll further sell or not!

Meanwhile, undeveloped land couldn’t be depreciated while there’s no income from lease. Unless its geographical location is prime and investors are budding to build something, you can expect revenue but in due time. Total rate is also erratic due to external factors like state laws and other overhead costs.

High-risk investments

High risk isn’t for everyone but only for those who can afford some money to lose if the plan backfires. If you couldn’t bear such monetary loss, heavy imbursement is absurd or steps like extracting money from your limited savings just for the sake of property management and investment. Things might go in favour if you’ve enough cash-in-hand plus filled up bank account, this is when you can afford high risks.

The clouded menace

The greatest threats whether you’re involved in property or any other sort of investment is the one you couldn’t see but is lurking nearby. A few involve currency rate fluctuation, bad trades in highly leveraged account or highly potential disclaimers.

Apart from this, natural disasters like flood, earthquake, landslide, tornado or fire outbreak, these areas such which couldn’t be envisaged. Besides, how would you face quandaries that aren’t even predictable until and unless you’ve some clue about it!

Budget matters

Apparently you must’ve set a specific budget to invest on property! If not, then take into account all the financial matters like down payment, inspection money, loan fees and other acquisitions.

You might need to renovate it before moving in so do reserve some additional amount for such cases. Ten percent of purchase price usually covers one-year loan payment while 20 to 35 percent is for other expense.

  • Requirement for loan

There’re plenty of financial documents required to get your loan approved including personal balance sheet, asset list, bank statement and current tax returns. Get in touch with a certified chartered accountant to solve all the complicated matters thus proving your money is ready in the bank and you can withdraw it anytime.

Conclusion

A common mistake which most investors do in property management is avoiding real estate agents or brokers for the sake of saving some additional sum. Be sure you follow all the right steps as defined above!

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