One of the biggest concerns we hear from potential investors is: “What happens if I lose my job?”, but this worry shouldn’t be a major cause for concern for you as a property investor – and here’s why
The thought of losing your job can make you anxious. It’s an understandable fear. Many people worry about the financial side of investing in property and how they will afford to maintain their lifestyle plus their investment expenses if they don’t have a regular income.
Rental income: Your financial protection
As a landlord, you are responsible for paying the mortgage on your investment property. However, you don’t have to come up with this on your own – the rental income from your tenants will keep flowing in, even if your employment income suddenly dries up. So you should continue to receive enough funds to cover most (if not all) of your mortgage repayments, regardless of your job status.
Where investors start to panic is when their property investments are heavily negatively geared. If your rental property costs you $50 per week to run then you can probably afford the extra costs for a few months while you seek employment, but if your investments are costing you $500 per week you could find yourself in some financial strife until back in work.
What do you do if you lose your job?
In conclusion, most people will be able to weather the short period between jobs if they have set themselves up properly at the start with a good risk management plan.