Risk

Mitigating Risk

Significant decline in property sales market

Performance calculated on conservative estimates.

High profit margin expectations to protect against discount in the sales price.

Paying above market value for property

Good knowledge of investment area.

Exposure to bank loans/mortgages

Strong equity position on purchase. A strong equity position when purchasing a property enables partners to leverage equity by withdrawing capital for future use. In addition, it will provide a buffer in the event that the market takes a down-turn, especially immediately after a renovation

Purchasing below market value property

Vacant periods on rented property

Conservative occupancy expectations and good rental track record in target areas.

Cash-flow issues

Healthy cash-flow at all times.

Becoming a motivated seller

An effective exit strategy during the evaluation and acquisition phases. For example, if the market starts to cool down, choosing a buy to let strategy instead of selling or selling before market falls further.