# 3 Potential Property Damage
Another risk in investing in property is the potential damage to your tangible assets.
Because there is a physical form, of course damage can occur due to several things such as weather or natural disasters, fires, and robbery and vandalism.
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This of course must be considered because it usually requires repair costs. So, don’t forget to take it into account the selling price later.
The good news is, now there is home insurance that can protect your property against damage. But keep in mind also that this risk mitigation also cost you money to pay for.
# 4 The existence of Debt Gearing
Debt gearing is a serious consideration when dealing with the risks associated with property investment.
Debt gearing is nothing but the difference between debt owed by property investment and equity and the investment itself.
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The ratio of debt to equity is determined by the purchase price and the amount of funds that constitute a loan.
Where the farther the difference between debt and property value, the lower the risk.
Equity itself means the value of your property, which is greater than what you owe.
For example, the debt for buying your property is $440K, while you owe $200K, the equity is $220K.
Its debt-to-equity ratio is 45/55, as debt accounts for roughly 45% of the property’s value.
Therefore, it is highly recommended to refrain from borrowing more than the value needed to minimize the risk of debt gearing.
Do not forget that there is a risk of increasing interest rates which will affect your ability to pay installments on the property.
The solution is to find a mortgage or home loan with a fixed interest rate or a longer stamp.
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Is Renting Property a Good Investment?
So, now you understand the ins and outs of renting property as an investment, including its advantages and risks, right?
You can carry out analysis and make the right decisions in doing the investment.
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Do not give up easily, remember that the property business is a business that generally provides benefits, especially if you are smart in running it.
