Investing in Property: What are its pros and cons?
Investing in something should always be carefully planned. For instance, if you want to invest in property, you need to educate yourself about it. Educating yourself about what you are getting yourself into will help lower the risks involved, and most especially if you are unsure whether it is actually really for you.
Investments have pros and cons. Naturally, property investment does too. Just to help you become more objective, here are pros and cons in property investment you must be aware of:
Property investment in general is a stable investment. Other markets can be extremely volatile, but because property takes such a long time to develop and to sell, it can be really lucrative. Another reason is that, it is always in such high demand. Right now, there are some problems when it comes to the number of houses that could accommodate the rising population. And because of this, it is enough reason to get into property investment.
Long-term Cash Flow
Investing in property is known to generate positive cash flow because you can earn from it by renting it out. If you play your cards correctly, you can earn enough not just for your expenses, but it’s also like your tenants are paying the property for you. When you are done paying your mortgage from this, it could effectively fund your lifestyle which is the goal first and foremost.
Another thing that’s great about investing in property are the tax benefits. There are tax benefits a property owner can claim, and some of these include tax saving if you’re losing some money because of it, and depreciation claims on some fittings and fixtures.
Takes a Long Time to Sell
One of the most challenging, if not, the most challenging part of getting into this investment is it’s not very liquid because it takes a long time to sell. It usually depends on the area, it could take weeks or even several months to even get someone to take a look at it so location is key.
If you decide to have your property rented out, you need to be prepared for some very difficult ones. Tenants can be a nightmare for different reasons, and the could really test your patience. Damages on your property are a possibility that’s out of your hands and are just something you should also accept especially if your tenants are not as meticulous as you.
There are additional fees you need to pay when investing in property, like insurance, council fees, mortgage repayment, renovations, maintenance costs, and these are ongoing. Sometimes, these fees may actually come when you don’t expect it at all so you should most definitely be prepared for that. Additionally, if you don’t find tenants for your property, it means that no rental income will come in and you will need to settle mortgage repayments from your own pocket. Shares allow you to sell a section of it if you need quick cash, but property investment does not.
These are just some of the pros and cons you will need to know about this type of investment. If you have weighed them and think that it is indeed for you, then the next step is to talk to a professional about making investment calculations. Property investment is indeed a smart move, but there are things you will most definitely to consider, just like any other investment.