Good Reasons to Start Investing at A Young Age – 4

When it comes to investing in property for the first time, you may feel like you’re in over your head.

Lacking disposable income and investment know-how, your chances of surviving the property market as you compete with cashed-up investors may seem slim.

However, here are some reasons I would suggest you consider investing from a young age:

What are the risks?

  • Unexpected expenses: You need to be prepared for unexpected expenses by ensuring that you have enough funds to cover contingencies.
    For example, if your tenant suddenly vacates the property, it may take a while to find another tenant, which means you’ll forego rent for a period of time.
    As a young investor, you may not have experience managing cash flow which is why it’s important to carefully plan for unexpected costs that may arise.
  • Property value: While an investment that’s situated in a good area with infrastructure and nearby facilities is likely to appreciate over time, there is a chance that the property could decrease in value.
    This market risk may harm your capital growth over time, however, this risk can be lessened through diversification, or by investing in different property types across different states.
  • Time-consuming: Managing a rental property takes time.
    You need to research the market and find a good property, advertise and find tenants, create a rental agreement or lease, design a budget for expenses, and so on.
  • Liquidity risk: A savvy investor knows that they should have an ‘exit strategy’ in the event that they suddenly need to sell the investment.
    This risk is associated with the idea that you may be unable to sell a property should the need arise.
    To manage this risk, you should invest in an area with strong demand and positive buyer sentiment.
  • Economic risk: Although the Reserve Bank has eased monetary policy in recent times, and with a historically low cash rate of 2%, interest rates are predicted to rise early next year.
    This interest rate risk means that the cost can increase for a variable home loan.
  • Buying the wrong property: Unless you engage in thorough research, you risk purchasing a property that will not meet your investment objectives.

In order to minimise these risks, you should educate yourself and surround yourself with a good team.

Investing in property for the first time can be exhilarating, and there is no better time than when you’re young.

RealRenta has all the tools that a property manager has, but less than ¼the cost of a property manager.

Join now and the cost is less than a cup of coffee a week to manage your rental property

RealRenta also has a free vision, so why not check it out

Jason Gwerder
Friday, 12 November 2021

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