Residential property investing continues to be a popular option in securing a secondary income and fortifying financial futures – but is it worth the risk?
What Are The Risks?
The type and extent of the risks can vary between each Wellington rental property, here are a few examples of common risks that can occur:
Location Risk
Location is key in determining the value of rental properties in Wellington. As your investment is in a fixed location, there is a risk that house prices could fall or remain statics in your chosen area, decreasing the value of your property.
Another risk is that the suburb you invest in may not be popular amongst tenants or could lower in demand in the future, prolonging vacancy periods and costing you more money in unpaid rent.
Interest rates may increase, reducing the money made from the property.
Tenanting Risks
You’re at risk of getting ‘bad’ tenants that can damage your investment property, and cause more stress and time than necessary to manage.
There is a risk of long vacancy periods between tenancies, taking money out of your pocket in unpaid rent.
Managing properties can take up too much of your personal time and can end up being overwhelming.
Exposes you to possible tenant grievances that can lead to legal proceedings.
What Are The Benefits?
The rental income provides you with a secondary income, reducing debt and increasing your equity.
Expenses on the property can be tax deductible.
You can make long-term gains as the property value increases.