Temperament of property investors covers the whole spectrum ranging from risk avoiders to risk takers. Well, it depends on the depth of the pocket and the readiness to accept the loss.
One can’t compel someone to become adventurous and take greater risks in anticipation of high returns.
It is the reason; one should consult and refer experts while exploring property investment opportunities. A wise use of tools will build diversified, well-balanced portfolio.
One should follow the approach that he or she finds comfortable. The degree of fear of loss determines how much risk an investor can take.
Creating a customised portfolio to accommodate the risk attitude is the right way of mitigating risks.
Risk is a ‘personal thing’
Experts call risk the personal thing because individual temperament and tolerance play a critical role. An investor doesn’t hesitate in investing in a property that offers a greater risk if he wants to achieve the targets quickly.
An investor who is not very much particular about the timeline invests in a property that gives yield slow.
It is needless to say that a downturn in the real estate market puts a greater impact on high-risk investors than the low-risk ones. They get panicked and sell the property at lower rates.
Low-risk investors can sustain with the property during the turbulence times. Thus, there is a minimal chance of incurring a loss.
It is needless to say that several other factors also decide the degree of risk in a deal, i.e. location of the property, quality of construction and demand.
Age determines your risk-taking ability
As the cliché goes, “when you are young, take more risk because you have more time to repay or recover from the loss”; you should not indulge into a poor investment if you are above 40 years of age.
People below thirty can take the risk of investing into a long-term project. Staying invested in a project with a low risk can be fruitful when you expect the return in twenty or thirty years.
Do not take risk beyond your sustaining capacity. A sudden downturn loses the comfort level and increases the anxiety.
Risk tolerance is relative
Investment goals largely influence your risk tolerance. The more seasoned investor you are, the higher is the tolerance. Strategies that aim high potential returns are beneficial for risk-tolerant investors. They can put big money in the top localities of London and around, and can earn excellent returns.
With the experience, you learn what is the risk in investing in a particular area? By giving conscious consideration to all the options, one can mitigate the risks considerably.
Investment in property involves purchases residential or commercial property in anticipation of capital appreciation or monthly rental income.
UK Market has been quite impressive
Looking at the statistics, property prices in the UK have been quite impressive so far. However, it is always tricky to invest in properties unless one sits on a lump of cash.
Fluctuation in property prices should be considered and factored well. Learn how to combat the potential downside of property investment.