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How to Mitigate Risk in Your Raleigh Investment Property, Part 1

Investing in property can be personally rewarding as well as profitable. Ideally, prospective landlords can purchase a condo, duplex, or single family home; charge a monthly rent which covers the mortgage payment; and collect a little extra to make a profit. Eventually, if all goes well, you will be able to sell the property for more than you paid for it.  

However, with all that said, nothing in life is without risk, and investing in property certainly has its own share of potential issues. Below are some of the most common risks when it comes to property investment, and tips on how to mitigate them.  

Risk: The property’s value doesn’t rise over time.

Solution: Choose your property wisely.

The key to making a profit is choosing a good property at the beginning. Try to select a property which is in a low-crime area, has a good school district nearby, and doesn’t need major structural renovations. Not only will this help you find more reliable tenants, it will also ensure that your property value rises enough through the years that you can eventually make money off your investment. A realtor or property management company can help you identify and select a good option. 

Risk: You purchase a “fixer-upper”, but end up spending more money on repairs than you make back.

Solution: Avoid “flipping” houses, unless you know what you’re doing.

Popular shows like “Flip or Flop” and “Fixer Upper” have popularized the notion of purchasing a low-cost house, repairing it, and selling it for a profit. However, this strategy rarely works out as well as it does on T.V. Most first-time property owners underestimate the time and money they will have to spend to make a profit, and end up losing much more than they gain. Unless you are very experienced in renovating properties, we recommend avoiding “fixer uppers” and choosing a property that is already in good condition.

Risk: You purchase investment property, but your tenants do not pay their rent on time and cause other problems.

Solution: Screen your tenants carefully.

Even though screening tenants takes more time than simply handing the keys to the first applicant who walks in the door, it is extremely helpful in the long run. Finding reliable, professional tenants who can be depended on to pay the rent on time will help you make a profit and give you peace of mind. Careful screening will also lower your risk of acquiring problem tenants, who may cause property damage or even force you to go through with an eviction. If you do not have time to vet applicants, you can outsource the work to a property management company. Contact Barker Realty today to start the conversation!

To read Part 2 of our series: How to Mitigate Risk in Your Raleigh Investment Property, click here.

Barker Realty, Inc. is a full-service real estate brokerage firm with more than thirty years of Raleigh NC property management experience. To set up an appointment with one of our skilled property managers, click here.

"Let each of you look not only to his own interests,

but also to the interests of others..."

Phil. 2:4