Real Estate Investor Magazine South Africa February 2015 | Page 36

MANAGING

BY JASON VORSTER

Keeping

your Assets

Safe
Eight

Y

ways to protect
the wealth of your
property portfolio

ou have accumulated your property portfolio,
and have discovered that property investing is
as much about liquidity as it is about choosing
properties, managing tenants and arranging finance.
You need to ensure you are able to access cash to feed
your portfolio and enable it to grow.
1. Income protection insurance
If you are a negatively geared property investor who
is a contracted employee or is self-employed, your
salary does not have the same stability or security as a
wage earner who is a permanent employee. One riskmanagement strategy is to maintain the stability of
your income is to take out income protection insurance.
This ensures you continue to receive a certain income
if you suffer a decline or inability to work. Income
protection insurance covers you for such things as
illness or disability.

36

February 2015 SA Real Estate Investor

2. Landlord insurance
We have all heard horror stories of tenants who trash
rental properties, become months behind on the rent
and skip the premises. This not only costs investors in
repairs and lost rent but also causes delays in collecting
future rent, because of the time required to get the
property in order.
Prevention is better than cure. Landlord insurance
offsets the cost of a bad tenant. This can mean
the difference between bad tenants causing minor
disruption versus large cash black holes. As with
income protection insurance, the premium for
landlord’s insurance is tax deductible.
3.Keep a buffer
The easiest way to ensure you can get cash quickly is to
have some on standby. There is no substitute for cash,
it is the most liquid asset and a ready supply is one of
your best risk management measures.
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