Posted by Ask most property investors what the risks are and you’ll often hear the same two answers: either the tenant stops paying, or the market drops. Both are real risks, but they’re just the tip of the iceberg.
In my experience coaching investors, it’s rarely the obvious risks that cause the most damage. It’s the ones nobody thought to look for.
I’ve developed a structured approach to assessing any deal before I commit to it. I call it the ORC model: Opportunity, Risk, and Capital. The Opportunity is the asset itself: what’s the potential, what’s the return, how do you unlock it. The Capital is what you need to raise to make it happen. But it’s the middle letter, Risk, that most people gloss over. That’s where deals are won or lost.
This week I want to take you through how I think about risk in a systematic way, not to scare you off investing, but to make sure you go in with your eyes open.
Know your own relationship with risk
Before you even think about a specific deal, you need to run an honest assessment on yourself. I’ve seen investors who genuinely cannot sleep at night when a deal goes sideways. If that’s you, the question isn’t just whether something is a good deal, it’s whether the potential rewards are worth what it’ll cost you in stress and lost sleep.
I think of this as a spectrum between two types of investor: the Gambler and the Analyst. The Gambler runs on gut instinct and emotion, easily seduced by FOMO, jumping into deals, moving fast without doing the homework. That was me, early in my career. To be fair, I made money quickly because of it, but I also made some expensive mistakes when the market turned, because I’d never properly stress-tested my assumptions.
On the other end sits the Analyst, someone who fears making a mistake so deeply that they confuse uncertainty with danger. The Analyst requires certainty before acting, which means by the time they’ve run every scenario, someone else has already bought the deal. This is paralysis by analysis, and it’s just as costly in its own way.
Neither extreme is ideal. What you’re looking for is self-awareness: knowing where you sit on that spectrum so you can compensate accordingly.
The Risk filter
Once you’ve done that inner work, you’re ready to assess the deal itself. For every risk you identify, apply a simple two-question filter:
1. Is this risk within my control?
2. If not, can it be managed or mitigated?
Those two questions are deceptively powerful. Take location risk: you can’t change whether there’s a train station nearby. But you do control whether you buy the property in the first place. Some risks can be managed through process (thorough tenant vetting, for example). Others simply can’t, so knowing that upfront helps you decide whether the deal is worth pursuing at all.
The risk breakdown
There are more risks on any deal than most investors ever consider: here’s how I categorise them.
Property-level risks
Asset risk is simply the condition of what you’re buying. An attractive 1950s house with a big garden might also have outdated electrics, rising damp, and a roof that’s on borrowed time. Always bring a building surveyor on board so you know what you’re walking into.
Location risk is about more than just the postcode. Is it near public transport? Good schools if you’re renting to families? Close to employment hubs for professionals? Near a hospital if you’re targeting healthcare workers? Location is largely fixed, which means that if it doesn’t stack up, no amount of refurbishment will help.
Leasing risk is particularly relevant in commercial property. I’ve owned retail units on quiet main streets where I spent years trying to find a tenant, and believe me, if you’ve never experienced a vacant commercial unit, it’s not something you want on your plate.
Financial risks
Market risk is the one most people think about first, and rightly so. But the market is by definition outside your control; what you can control though is your entry price. If you’ve bought well, you have a buffer. If you’ve paid top of the market assuming prices only go one way, you’re exposed.
Financial risk usually comes down to interest rates and cash flow. A deal that works beautifully at today’s rate might not work at all if rates spike. Floating rate mortgages cut both ways. The key question is: what does my worst-case monthly position look like, and can I sustain it?
Funding risk is the one that catches refurb investors off guard. The plan might be to buy, renovate, refinance, and pull your capital back out, but what if the bank’s valuer doesn’t agree with your numbers? What if the lender has a specific policy that blocks refinancing for your property type or area? Always, always have a contingency plan for your capital.
Operational risks
Tenant risk is something every landlord knows about, but not everyone manages well. The issue isn’t just bad tenants who game the system, it’s also good tenants who lose their jobs or hit hard times. Here in Ireland, the RTB rules mean a non-paying tenant can be very difficult and slow to remove. So rigorous vetting upfront (checking income, references from previous landlords, employment stability) can dramatically reduce this risk.
Execution risk is the one you point the finger at yourself for. Do you have the skills this deal requires? Being honest here matters, because overconfidence is just as dangerous as lack of confidence, maybe even more so, because you won’t know what you don’t know until it’s too late.
Timing risk becomes critical the moment you’re doing anything more than a straightforward buy-to-let. If you’re flipping, developing, or going through planning, time is money… and delays have a habit of compounding. A two-year planning process can turn a profitable deal into a marginal one if the market moves against you in the interim.
Construction risk is closely related. Contractors might give you a quote and a timeline, but construction has a way of surfacing surprises: unexpected ground conditions, structural issues, materials delays. Always build a contingency into your budget.
Macro and external risks
Regulatory risk is growing in importance. Here in Ireland, changes to tenancy legislation, including the upcoming six-year automatic tenancy rights, are reshaping the economics of residential investment. For anyone running HMOs, local authority licensing and room size regulations can materially affect your income. Regulation changes are largely outside your control, but they can be anticipated and planned for.
Unforeseen and political risk is, by its nature, impossible to predict. COVID is the obvious recent example, for a period it wiped out income for thousands of landlords and froze the market entirely. Geopolitical instability, global conflicts, or major economic shocks can all ripple through property markets in ways nobody saw coming. You can’t eliminate this risk, but you can make sure no single deal, especially a highly leveraged one, could sink you if the worst happened.
Infrastructure risk is one that’s rarely discussed but increasingly relevant. Here in North Dublin, there are now genuine concerns about whether the electricity network can support new housing developments, in the middle of a housing crisis. If you’re buying land on the edge of a growing town banking on rezoning, you need to find out whether the roads, power, water, and sewage will actually be there when you need them.
Protect yourself before something goes wrong
A thorough risk assessment doesn’t just mean deciding whether or not to do a deal: you also have to stress-test your exit. What’s your preferred exit? Who is your buyer? What happens if they pull out? If you had to drop your price substantially, would the deal still work? Could you hold the asset and rent it if you had to, and would the cash flow support that?
Running these scenarios upfront (including the ones you hope never happen) is what separates experienced investors from people who get caught out. The losses that really hurt are almost always ones that, on reflection, were foreseeable. Not inevitable, but ones that should have been on your radar before you even started.
Finally, think about structure. Holding assets in a limited company rather than personally can ring-fence your exposure. If a deal goes badly wrong, you want to make sure the bank can’t come after your home or other assets. This is especially important when you’re using high leverage; borrowing a multiple of what you’re putting in amplifies both your gains and losses.
Risk isn’t your enemy. It’s a feature of every deal, every investment, every opportunity worth pursuing. The goal isn’t to eliminate it: that’s impossible. Instead, the goal is to know what you’re dealing with, decide what you can live with, and structure yourself so that if things go wrong, it’s a setback rather than a catastrophe.
Keen to know more, or boost your knowledge? Take a look at the programs I currently have on offer: they’re built to give you clarity and confidence, no matter what your level of experience is.
Find out more at https://elitepropertyaccelerator.com/