YOU’VE taken the plunge like so many and invested in property.
While it may have been a bit stressful at the time that was the easy bit, how can you protect yourself from unforeseen disaster?
According to founder of Dream Design Property Zaki Ameer, not being able to make a loan repayment on time can be one of the most common and frightening issues for property investors.
He said last year more than 50,000 fulltime jobs were lost in Australia, so while everything likes to think they are in a stable work environment, you just never know what could go wrong.
For some investors, unexpectedly losing their job, or becoming too ill to work, could spell the end of their property portfolio dreams.
Mr Ameer said urgently selling up was not always the outcome, particularly if you’ve prepared yourself for potential hiccups before they arise.
He said income protection insurance was an absolute must for anyone investing in property.
While it may appear unnecessary, in the case of illness or injury many policies covered up to 80 per cent of your income.
“Meaning expenses incurred via your portfolio are still covered until you recover,’’ he said.
“(And) also, in most cases income protection premiums are a tax deduction.’’
Mr Ameer also recommended having a neutral or cash flow positive cash portfolio.
“If overall across a property portfolio the rents equal or exceed the costs and repayments, sustaining the portfolio will not be contingent on (your) job income and will give peace of mind in the event you are forced to stop working.’’
Make sure you create a buffer in your offset account.
Keeping surplus funds here will both offset a portion of the interest being paid on the home loan and if your property is negatively geared and you contribute weekly, it can be used to cover a shortfall if you suddenly lose your job.
YOU’VE taken the plunge and invested in property – that was the easy bit. How do you protect that investment from unforeseen disaster?