How to Reduce Property Investing Risks
Property Investing — Week #51
George Choy & Sarah Choy | 7 February 2020
Learn how we reduce property risk with this #1 tip we do for every property…we started this after losing money on property in the past.
- Here’s a link to the Six Figure Summit 2 day property conference I’m going to next week.
- The book on habits that Sarah read this week is: The Slight Edge — by Jeff Olson
- Going to TEDx was a great experience and I reccomend it to anyone who is already a public speaker or considering doing it.
Reduce Property Risk
We have had some really bad experiences over the years, where unexpected costs have arisen. For example, we had 50% of our Buy-to-Let properties vacant at the same time—we were bleeding money and living on the breadline.
We’ve learned from that experience. We now have a “Courage Pot” which contains 6 months of business expenses in cash, which we can liquidate within a month or less. This pot is divided into separate savings accounts, that we don’t touch.
What this does, is stop you from making desperate decisions. When you have no money and are worried all the time, you come across as desperate to other people— they can sense it, and it turns them off from doing business with you. You will find it a lot harder to come out of the hole.
But once you have this courage pot in place, then when one of your properties has a void (is empty), you don’t stress about it—you just accept it as a cost of doing business and know it will happen at some point. Your courage pot will pay the bill if you don’t have any other savings at that time—although we try not to use our courage pot.
Consequently, when we buy a property, we not only calculate how much money we need to purchase, such as stamp duty—but we also add on the extra money to be put into our courage pot. This ensures you will always be able to pay the mortgages, utility bills and any other costs for being vacant. We make sure we have the courage pot saved before we go ahead.
So, if you decide to lend money to someone for a property deal, make sure you prioritise having your courage pot in place for any existing properties that you have.
Live your dreams, George & Sarah
P.S. Have your bought your copy of RETIRE NOW!