The lure of high investment returns is a big draw for many individuals looking to grow their portfolios. The booming property market in Singapore over the last few years has been driven by the high demand for commercial properties, condos and Housing & Development Board (HDB) flats. But what happens when the demand lessens and/or interest rates go up? Are you adequately prepared for a market slowdown?

A high risk, high return affair
Managing risks, such as a decline in capital, rental value, non-paying tenants, unexpected expenditures and rising interest rates is something that every investor should plan for. Approaching property investments with due diligence, research and proper risk management will minimise the danger while maximising your earnings.

While it is advisable to consult a property investment professional, such as a Chartered Mortgage Analyst^™ with ChMA^® certification, having a grasp of the essential knowledge needed to minimise risk is always recommended.

• Cover all bases – With the number of rules and regulations governing the property market in Singapore, it is of vital importance for you to know the relevant laws and do everything ‘by the book’. Understanding all the guidelines pertaining to your property eliminates the risk of losing your property over a minor infraction.
• Protect your assets – Like any other investment, it’s important to protect your assets to ensure that they don’t end up being a liability. Renting out your property has very real risks, as tenants in general are not as invested in the upkeep of rented property as they would be if they owned it. Insuring your property ensures that you’re well covered for any damages, giving you that added peace of mind.
• Pick the right tenants – Picking the right tenant for your home is like selecting the right person for a job. It might sound like an easy task but it isn’t. Choosing the wrong tenant can lead to many unnecessary and expensive problems down the road such as a tenant not paying rent on time or wrecking your home, costing you expensive maintenance and repair fees.
• Pay less – Property prices are as volatile as the stock market. That’s why the best time to purchase your property is when it’s priced at 10% to 40% below the market value. In doing so, you provide a buffer for yourself so even if you do have to sell, you know it won’t be at a loss.
• Rent cheaper – The way to make your property work for you is simply by keeping it rented. Keeping your property vacant for months to hold out for an extra S$100 a month just doesn’t make much economic sense. By pricing your rent just a bit lower, you’ll soon have tenants knocking at your door. Although the above tips will help to minimise your risk and protect your property investment, there are still several things that could happen that turn your investment into an unprofitable venture. Knowing how to prevent these scenarios is where a property investment professional, such as a Chartered Mortgage Analyst^™ with ChMA^® certification, comes in.