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How To Protect Your Property Portfolio And Income

property portfolio financial protectionOne of the biggest risks of purchasing property is cash flow. Loan repayments, specifically, tend to be an intimidating factor among interested real estate investors.

Why? Because unforeseen circumstances could ultimately lead to investors losing their portfolio.

This could be prompted by unexpected job loss, or if and when serious health issues come up that prevent you from earning our regular income.

To help address these very real risks, it’s important that you are prepared. Safeguard your property portfolio. Following are some key points that eveyr property buyer should keep in mind:

Income protection insurance is critical

Income protection insurance is often considered expensive and unnecessary. But in the interest of protecting your portfolio from unforeseen pitfalls, it should actually be a priority. Yes, it will incur additional monthly cost, but it’s a small price to pay for the opportunity to safeguard your investments should you become ill and be unable to work or get laid off from work unexpectedly and lose regular income.

In 2016, 50,000 Australian jobs were lost according to the Australian Bureau of Statistics.

Do your research on what policy will best suit your needs

Not all income protection policies are made equal. So take the time to study your options and choose one based on what’s the most cost-effective and beneficial option for your needs. Review your options diligently, you will find something that will address your needs and ensure that you are able to safeguard your portfolio.

Maintain neutral to positive cash flow

It’s common for investors to depend on their employment income to support their portfolio. But remember, you have to be pragmatic about your investments. If your portfolio is equal to, or worse, exceeds the costs and repayments of rents, then you’re leaving yourself vulnerable to unexpected risks.

Be sure to create a buffer in your offset account

With an offset account ready, you can maintain surplus funds that can help you manage paying off interest and provide a contingency fund for emergency situations.

Of course, despite all efforts to protect your portfolio, there could be instances that are completely unavoidable. In such cases, you have to be prepared to—

  • Talk to your bank and let them know about your current situation. Contrary to what you might assume, banks will actually be able to help you manage your repayments following your new financial situation.
  • Do a complete review of the market value of each of the properties on your portfolio. Staying up to date with current rates means you can project where your finances are headed in a realistic way.
  • Seek out the help of an expert who can help guide you through the financial changes and adjustments that you have to make.


A Financial Planner I Can Recommend

I recommend Tatiana Coulter from Monarch Advisory Group for this type of Insurance. I use Tatiana personally for my own insurance and you should, too. She is exceptional and really understands the ins and outs to do with protecting your property portfolio.

You can learn more about their services at the Monarch Advisory Group website.

Do you find you have sufficient insurance cover? In what ways have you already benefitted? Feel free to leave a comment below.