R1RR has been Launched…

RISK MANAGEMENT IN PROPERTY INVESTMENT

 

Surely owning properties are the way to long term wealth creation?  Unfortunately, it does not always turn out that way.

When buying property for investment purposes, it is important to determine whether your can really afford the property. Generally, investors will have to apply for mortgage bonds with banks in order to finance the property investment.  As the bank will provide the financing, the property purchased will be the bank’s security. In reality it is a very easy concept, if you pay your bond as it is due, a beautifull relationship can be created with the bank, however, should you fall in arrears with your monthly bond instalments, your investment can turn into your worst nightmare.

The process of evicting a tenant, claiming payment of arrear rentals, damages and breach of contract is a lengthy and expensive process.  To add to insult to injury, if the Landlord only relied upon rental income to cover his monthly bond instalment, the Landlord will not be able to service his monthly bond instalments.   This of course, can eventually lead to the Landlord’s property being sold on Auction. Nationally, current statistics from TPN show that 60% of tenants are late or non-payers..

The solution to this incessant problem is to change the payment system. Realty1 has created a new Rental Product to demolish the 60% late and non-payment problem. As soon as the rent is collected, the rental agency is notified and the landlord is paid within 2 days.

A further benefit is that non-paying tenants are identified and addressed sooner with remedial or legal action, minimizing unnecessary further income losses to the landlord. Realty1 believes this service will be a substantial leap forward in rental risk management and should make buy-to-let investments once again attractive for property investors.

The easiest way to manage your risk is to know the risks involved and plan accordingly. 

Eunanda Fourie is an attorney, notary and conveyancer with the firm EUNANDA FOURIE INC, and is involved with properties and related industries on a daily basis.