In property investing, as in life, it is always wise to consider the downside of any action you might be thinking of taking. You might decide to get married for example! While there are a lot of great aspects of marriage such as companionship, support, sharing life’s experiences with someone you love, fun and friendship to name but a few, there are downsides too. Any of us who have been married for more than a few months will know the need for compromise, swallowing your pride from time to time, say sorry on a fairly regular basis, and accept the habits (bad and good) of your partner with little hope of changing them fast.

In circumstances where your relationship is under great stress and where communication has broken down irrevocably , there is always a way out, but it is painful and costly.  Looking back on my divorce from my first husband, there were definitely things I could have done differently to ease the pain and heartache of our inevitable separation.

Hindsight is a wonderful thing though, isn’t it! I have tried to take some lessons from that situation and applied them to my strategy for investing. Here are some of my thoughts about protecting yourself from the downside. What are the downsides to property investment?

1) Having too many void periods

2) Not getting tenants of the right type

3) Getting low yields and therefore low cash flow

4) Not getting your money out of the property after you have developed it

5) Too many ongoing costs hitting your profits

6) Property values going down

7) Your business taking too much time … and many more!

So how can you protect the downside? Here are my suggestions …

1) Don’t over-gear.

2) Don’t under-gear. Yes these two points may seem to contradict each other, but you need to keep some liquidity in your back-pocket for when times are hard. You can’t achieve that if all your capital is tied up. Nevertheless if you have a huge mortgage, then when times are tough, this will be the biggest stress on your finances.

3) Ensure you save regularly into another account and keep some of this as cash to cover voids, maintenance and other spending

4) Manage your advertising, marketing and sales to ensure a good continuation of tenants

5) Re-evaluate your portfolio annually to see if you have any dud properties that you need to sell off or re-configure

6) Raise your rents!

7) Plan to re-finance when a number of factors have been met

8) Manage your maintenance with precision – don’t let bad workmanship, poor quotes, picky tenants or over-keen DIY men take your profits!

9) Break down your systems into chunks so that you can outsource, recruit help, and prioritise your time more efficiently.

10) Regularly review your finances with an accountant to see where your black holes are.

Finally – TAKE ACTION. Don’t procrastinate or delay. The longer you leave it the worse it will get and the longer it will take you to come back after a void, a costly maintenance job or a bad tenant.