Risk Management In BTL Property Investing
People buy BTL property for a variety of reasons, but the main ones are to produce a good rental income, long-term financial gains, and to secure assets for future generations.
Investing in property involves not just managing the risk of things going wrong, but also the opportunity cost of tying up your cash in the wrong place.
A few thoughts on risk management…
✔️ Analyse the market thoroughly in many areas
Consider examining the intricacies of a few markets in-depth, right down to the local strategy in each location. Not just what you can get for your money, but also whom you would work with if you didn’t want to do anything.
✔️ Match your investing goals with the appropriate location and technique
Only you can answer the question of why you are investing and what your ultimate financial goals are. Also, consider the investing horizon. Some tactics will not work for you, and certain settings will never work for you. Determine this before investing your time or money.
✔️ Get a handle on micro-level trends
Here’s an easy example. Accommodation for students. Although purpose-built student housing (financed by institutional funds) is a countrywide phenomenon, not all university cities will see the same amount of expansion in this sector. Has planning permission been obtained in your preferred investment region for hundreds of additional student rooms over the next 3–5 years?
✔️ Recognise and limit the risks
All property investments carry some level of risk. Rather than burying your head in the sand or avoiding the sector entirely, make it your business to learn about the risks associated with your possible investment opportunity early on and then figure out how to limit your exposure.
