English translation, article originally appearing in the Vision China Times, Melbourne (18 December 2015)
Smart investors often add property to their investment portfolio. Lower volatility, potential tax benefits and control over assets have made property investments attractive for those seeking lucrative capital growth. In Australia, property values are growing up to 7% per annum and purchasing intent in the real estate marketplace is hitting a historical high.
As passionate investors dream of solid returns flooding in, crucial things that may go wrong are sometimes ignored as the trends heat up. Unexpected events such as fire or explosion, rental default, malicious and intentional damage by both tenants and criminals may result in expensive loss. When considering property investments that guarantee safe capital return, several factors can help safeguard it:
1. Reduce your risk by picking the right location
Damage from natural disasters, such as bush fires during scorchingly dry Australian summers, high winds and storm surge, are likely to occur if your property is located besides reserves, bushlands, creeks, storm drains and lakes. Statistics show that extreme weather events, for example, storms and hail, have resulted in damage to 30,000 properties in the past three years. Bushfires destroyed up to 2029 properties in 2009, leaving tragic damage with thousands of dollars in repair costs.
It’s not only nature that you need to consider – don’t forget the human factor when choosing the location of your new property investment. Unsafe suburbs with a higher crime rate nad drug use may lead to a high incidence of theft and household burglaries. This will make your property unattractive to potential tenants, and also impact the value of your property. Safety and liveability always matter, even if you don’t live in the property yourself.
2. Safeguard your property
An ideal location doesn’t always prevent risks your property. Common problems, such as water damage from storms, can be minimised if you know how to protect your property. Heavy rain can impact any location, and it’s wise to check the following items during your house inspection:
3. Choose your tenant wisely
It is helpful to engage a professional property manager who will help you choose the right tenant and be proactive in the maintenance of your property. Bad tenants can cause trouble and loss, for example they may default on rent payments, deny you access to the property or vacate without notice. They may damage the property, leaving you with massive clean-up and repair bills.
4. Protect your investment
Don’t wait for something to happen before organizing the insurance for your investment property – it will be too late. Extreme accidents may arrive when you’re unaware and even the best tenant could accidentally damage a property or lose their job and be unable to pay rent. A tailored landlord insurance policy is crucial for owners to cover loss and save efforts. The following insurance can be considered to safeguard your investment property: