Investment Tips

Pros and Cons of Investment Properties

August 16, 2017

When it comes to making the investment choices, property ranks at the top of the list for most people all over the world and Australia is not an exception. Since buying a property is a long term investment, it is only wise to evaluate the pros and cons in depth before investing your hard-earned money. The evaluation of pros and cons is necessary to figure out, if investment property is worth making and whether or not it is the right choice for you.

But, do you know what an investment property is and how is it different from other types of properties?

Do not worry if you do not; we have got you covered!

Understanding Investment Properties

A type of real estate property that is bought for the sake of investment and earning profit is called an investment property. It entails the process of buying properties especially for the purpose of renting them out or re-selling them at a higher price with the intention of generating profit.

While this practice is widely common among professional investors, some non-professionals also buy a house or an apartment to earn profit. There are many websites, such as BuyMyPlace, where one can easily find a variety of properties. A lot of them also offer strata management services.

Pros of Investment Property

  • The rates of properties keep fluctuating providing people amazing opportunities to earn handsome amounts of money, by buying properties when the market is low and then selling them when the value of the property increases.
  • You can maintain a regular supply of money by renting out the property
  • This is a long-term investment that is not likely to go in vain. It is less volatile than many other types of investments.
  • When you buy a property, you do not invest in something intangible that can neither be seen nor touched, such as shares.
  • To invest in property, one does not need to have specialised knowledge or skills. The only thing you need, if you are willing to sell it at higher price, is to keep an eye on the real estate market.

Cons of Investing In Property

  • While renting out the property does maintain a steady supply of money, you are not likely to earn enough to pay off the mortgage or to cover all of your personal expenses. This means, you cannot solely rely on the rent, if you want to live a decent life.
  • Interest rates tend to increase with time, making it more difficult for you to pay off the loan
  • You are likely to suffer from huge financial loss in case the property market goes down.
  • Property investmentis inflexible. Let’s say if you have invested in stocks, you can sell some of the shares to meet urgent financial needs, but this is not possible in case of property investment. You cannot sell one or two rooms of your house if you have any urgent need for money.

While property investment is a great long-term investment, one needs to carefully weigh its pros and cons with regard to their circumstances and situation to see if it is the right choice for them or not.