An important aspect of any investment strategy, whether it is property or another type of investment, is the consideration of the risk for the client. This is the issue that causes the greatest amount of complaint in the investment industry. Unless it is considered, documented and explained to the client, they can claim negligence on your part. You may even be liable for civil action to reclaim losses that may have occurred. Because of this, it is vital that the investment strategy considers risk as an issue, offers mitigation and management strategies and discloses any risks in full.
Property Investing carries two main categories of risk:
- Investment risk, which relates to the risk of investing in property at all; and
- Specific risk, which relates to the risk a particular property type can bring.