Assessing risk

When investing in property, analysing and assessing risk is paramount. In fact the very term ‘investor’ has risk at the core of its definition “…minimise risk while maximising returns”.
When Nyko Property assesses locations we look at risk first. Analysing the risk of the location prior to even considering its capacity for growth. Only if we decide that the risks are minimal do we start assessing the location for growth.

 
Investors should use the same process when they are selecting the location and property they will buy. Unfortunately, over the years, potential investors have used this process to give in to fear – which is of course an emotional response rather than one stemming from any logical analysis. This fear has stopped them from making educated and considered decisions, instead being driven mainly by minimal research normally conducted by reading newspaper articles, blogs, Facebook or worse talking to a friend who has ‘one or two investment properties and done ok’.

 
This brings me to a second type of risk – the risk of doing nothing. This is an opportunity cost. If you had read and listened to Steven Keen, the overseas economist that famously lost a bet that the Australian housing market would crash some 7 years ago, you would have missed out on hundreds of thousands of dollars in capital growth in Melbourne and Sydney and would find it a lot harder to get into the property market today than you did in 2010.

 
Does that mean that the property market will grow year on year, for ever? Of course not, that’s not how markets work. As we always say at Nyko, there is no use trying to time the market – that is near on impossible. At Nyko we believe investors should buy when they can comfortably do so, purchasing a great property with potential for above average capital appreciation and rental demand. Then, of course, hold.

 
Analysing risk unemotionally and making an educated decision of when and where to buy is the key. Use professionals you can trust in the finance industry first. Once you have your financial house in order and a profile of the type of property that would work for your circumstance – then seek assistance from a property specialist like Nyko Property to give you the best possible chance for above average performance.

 

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