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Monday, 4 December 2017

PROPERTY INVESTMENT RISK THAT YOU MUST KNOW OF AND EFFECTIVE MITIGATION STRATEGIES IN ZIMBABWE.

Many people who love immovable property investing are not aware of some serious risk that is associated with this endeavor. However, I should quickly note here that this article is not meant to scare you away from property investing but its meant to equip you because beyond telling you about risk it will also tell you about effective mitigation strategies.  Investing into real estate without a knowledge of associated risk and mitigation measures is something that can lead to investment failure or loss. So if you love property investing then this piece of information comes to the right person at the right time because it presents information that can help you avoid some pitfalls that many an investor are falling into.



SELLING YOUR HOUSE ? THREE REASONS WHY YOU CANT DO IT YOURSELF (DIY).


Selling your house is a process about which DIY (do it yourself) doesn’t work. Many people tend to prefer the DIY way when doing various things in their lives. Probably, this is the reason why some manufacturers sell refrigerators with some parts like handles not installed but having some kind of inlets for the consumers to do it themselves. There can be many reasons why people prefer DIY. These ranges from the contentment that comes after one successfully achieves a personal task to the possibility of saving the hard earned money. Selling your house however, is something that you cannot achieve the DIY way because you compulsorily need help from other people who have trained to give special service to the complex process of selling immovable property. There are many reasons why this is so but here I will give three.




Risk 1. Fraudulent sale

This is the risk that you part with your money but you do not get property ownership because you would have been conned by a criminal. Usually property fraud is centralized around documents of ownership like title deeds and agreements of sale.

Mitigation strategy
Conduct a thorough inspection of title deeds at the deeds office or agreements of sale at the land developers’. Issues to do with deceased estates, caveats, unifracts etc are usually at play. Its important at this stage to engage a lawyer to do this part of due diligence because some things can be too technical and beyond the scope of your current knowledge.

Risk 2. Overpayment at purchase

This is when the buyer pays more than the open market value of the property. Open market value is the amount of money that the market influenced by prevailing forces of supply and demand is willing to pay for a property. If your strategy is to make profit by later selling the property then your plans may hit a snag because of this.

Mitigation strategy
Firstly you should get third part market appraisal of the property before committing anything financially. Secondly, you should discard speculation as your motive for investing into real estate. You should  have long term profit generating strategies like equity built up and net operating income as part of your real estate investment model.

Risk 3. Tenant destruction of property

This is when tenants abuse the property’s physical structure. You will be surprised to discover some people cooking using fire wood in a house meticulously finished with pine ceiling. Civility can be a difficult proposition to some individuals.

Mitigation strategy
Screen thoroughly potential tenants. Include a deposit amount that is deposited at the beginning of tenancy and its purpose is to cover any liabilities caused by the time of termination of lease. You should hire competent managers who conduct regular property inspections in order to nip any problem in the bud.

Risk 4. Economic downturn

This is when a national economy goes under and the market is no longer able to give you a deserving return on your investment (ROI). In the rental market tenants will give notice to negotiate the rent down or to vacate premises while in the sales one buyers will be giving offers below the value at which the property was bought for.

Mitigation strategy
Purchase properties with distinct features and located in the right suburb. In an economic meltdown areas that are in proximity to important amenities, the central business district (CBD), a prominent shopping centre etc  have better demand than those located elsewhere. You can get a detailed look into one such suburb in Harare called Belvedere.

Property investing is a great form of investment it can transform your wealth. It however, should be approached properly especially taking into consideration the risk and mitigation strategies herein given. Experts are also important to involve when investing into real estate. If you happen to be in need of one you may prefer to use those who give expert input to this blog because the fact that they make such contributions shows that they have confidence in themselves. You can be freely referred to one if you leave your details on the pop up widget ( bottom right of your screen if using a PC ) but in the mean time you may want to go through a contribution on selling property made by a (click here) lawyer.

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