Investing in properties is both rewarding and scary, so you must know what you’re getting into before jumping into the bandwagon of property investors. Just like any other thing, you should weigh the benefits and risks first before making any decision.
The more you know about investing in properties, the lesser the risks you would incur. In this article, we will be sharing with you the pros and cons of property investing. Make sure to read each one carefully before buying that property that caught your attention!
Pros of investing in properties
The good side to investing in properties is the stability it provides. And we all know how important stability is. Compared to other markets, properties have proven to be more stable time and again. It has its fluctuations, but the property market has always been less volatile than other investments like forex and the stock market.
The next advantage to investing in properties is that you can leverage your investments. It means that you can purchase more with less.
For instance, when you can deposit a particular property, the bank will loan you the rest. Instead of using your $50,000 and investing it in the stock market, you can take your money combined with the bank’s money and use it to purchase a real property worth $250,000.
3. Generating positive cashflows
One of the best advantages of investing in properties is renting them out to other people. If you cannot rent your properties out, you can still sell them for more than the price you bought them for.
4. Long term investment
Many people prefer to invest in property because it is one of the most significant long-term investments. As inflation progresses, your properties value increases so do the costs of rent.
Cons of investing in properties
1. It is not liquid
You can sell stocks in an instant, but your property may take longer to sell. Depending on your area, it may take weeks, months, or even years to sell real property. It means that if you need cash to be immediately accessible, you cannot rely on your investment.
2. Possible hidden problems
You have to exert lots of effort before buying real property. For instance, you have to get a building inspection, pest inspection, figure out whether it is in a flood-prone area, and you always have to keep your property up to date with the current standards.
3. High entry cost
Another con of investing in properties is that the cost of getting into them is higher compared to other investments. You can buy shares for as low as $500, but you have to pay thousands of dollars to get into property investing.
The bottom line is, you have to properly assess the rewards and risks associated with investing in properties before jumping on the bandwagon. You have to consider more things and concerns, so make sure to look into each one carefully.