Buying property can be a fabulous investment, especially if you do your homework. That said, no one can predict the future or know what tomorrow will bring. While many things remain uncertain, there are ways in which you can make your property more future proof and less of a risk. Here are eight tips we’ve put together to help safeguard your investment and protect everything you’ve worked so hard for.

1. Regular inspections

Like the old saying goes, better the devil you know. When it comes to protecting your property investment these are words to live by. Put simply, recognising small concerns before they erupt into major issues can save you thousands in the long run. According to David Hallett, Victorian Manager of Archicentre (the building advisory service of the Australian Institute of Architects), he agrees, saying that regular property inspections are one of the best ways to manage future risk. Hallett says it is important to detect problems, like termites and roof leaks, before they get worse and effectively reduce the value of your investment. Building and pest inspections are an absolute must prior to purchasing any property and thereafter he recommends having a pest inspection every year and a building inspection every two years.

2. Landlords insurance

While it might seem like an obvious answer, home and contents insurance is another way of helping you to control future risk. For investors, experts recommend landlord insurance in addition to your stock-standard building and contents insurance. Why? Building and contents insurance doesn’t typically cover landlords for things like malicious damage by tenants, accidental damage, legal liability for death or injury, and loss of rental income because of property damage or because a tenant absconds.

3. Scrapping schedules

When it comes to future proofing your investment it’s really important to have a ‘buffer’. Like saving for a rainy day, a buffer is simply spare cash… equity that is there if times get tough. Building your buffer is one of the keys to future-proofing an investment. Partner at accounting firm Chan and Naylor, Ken Raiss, says many investors ignore tax-effective strategies, such as scrapping schedules, which can help to build equity. For example, when you renovate a kitchen you hire a quantity surveyor who creates a scrapping schedule who puts a dollar value on the items which will be thrown away. “The values aren’t zero,” Raiss says. “It’s hard to pick a number, but say for an older-style home – 1960s style – you’d probably get $5000 to $6000 on a scrapping schedule. That’s a $5000 to $6000 write-off in the first year.”

4. Set up a line of credit

A line of credit is an alternative means to fund a property when a bank might otherwise not be interested in lending you the cash. Imagine you bought a house for $400,000 and owe $100,000 on the mortgage - that equals $300,000 in equity. Now, say a bank is happy to lend you 80% of the value, which in this case would be $320,000. You now have the opportunity to increase your debt to $220,000 via a line of credit. You also only pay interest on the $220,000 debt once you start to draw it down (aka use it).

5. Offset accounts

Opening an offset accounts is a great way to reduce the risk of your investment, especially when it comes to tax time. Popular amongst investors, an offset account gives you the best of both worlds; cash for unforseen costs and hard times yet also for deposits when purchase opportunities arise. The benefits are simple! Instead of accruing interest like a normal interest bearing account, they (as the name suggests) offset the interest paid on a loan that is linked to the account.

6. Sustainable properties

Another way to add value to your investment is to ensure your property is sustainable for the future. In turn, this makes day-to-day living costs more affordable, and thus the property more attractive, for the buyers. Insulation, energy-efficient lighting, ceiling fans and water-saving shower heads are just a few ways you can increase the sustainability of your property.

7. Fixed interest rates

One of the most common ways to lower your risk is to fix your interest rates. A fixed rate means you know where you stand, it provides reassurance against nasty surprises should rates suddenly increase.

8. Understand local planning laws

We’re not saying you need to have a law degree but we are saying you need to have a small understanding of local government laws, particularly planning laws. Local governments are constantly changing planning laws in order to improve affordability for buyers. Higher-density living and faster approvals are on the rise, bringing with them continual change, which mean that local planning laws have now become one of the biggest risks for buyers and property investors. By knowing the laws and the changes, when they arise, means you will always be one step ahead of the game, and your level of risk will be substantially lower.

For more information on purchasing a property or to discuss how you can future-proof your investment, please contact Hannah on 0419 782 133.

**This article does no constitute any financial or legal advice.  Speak to your advisor to find out what is best for your circumstances.