“Fear is a base emotion, one that is very easily manipulated”.
Investing in the Australian property market (or any market, for that matter) can be daunting if you are unfamiliar with it. Tenant vacancies, market dips, dud buys – the list goes on. But the sad truth is that the fear to invest may lead (and has led) to many middle-class Australians retiring on the poverty line. Some of the most common property investment fears, and how to address such fears, are as follows:
What happens if I can never find a tenant and my investment property just rots away untouched?
Unlikely. With record low vacancies and an increasing shortage of homes, this is a low risk for many localities. In any case, there are many ways to reduce the risk of vacancy – like investing in areas that have a shortage of supply, or (for super jittery investors) taking out insurance that will fund vacant periods for an agreed period.
Will there be better performance elsewhere? Can I get more for my money?
These considerations often stall or even stop an investment entirely. This category of FOMO (Fear of Missing Out) is the most detrimental kind.
There is a wealth of evidence showing that in many cases, time in the market will be more effective than timing the market. So, delays can be more costly than waiting for the better performance.
Fear of damage to property or poor tenants
Will my tenants throw raging parties and completely destroy my property?
Given that it is the land that increases in value and not the home itself, a building is going to be ravaged by the cause of success (time) anyway. Again, this risk is low in many areas anyway. And it can be mitigated by thoughtful research-based investing. Additionally, landlord insurance includes coverage for tenancy damage and can be extended to include a vast range of incidents.
Remember, FEAR stands for False Evidence Appearing Real. Don’t let fear stop you from investing in property and achieving your financial goals.