Are you planning to invest your money in preparation of your children’s future? Are you planning to buy a property? Are you confused on where to invest your savings?
During the onset of recession or economic crisis, seldom can you find the right investment vehicle to venture into. Some individuals fear to invest in real estate because they believed that it requires technical knowledge to own one. Some people believed that this investment is complicated, costly and requires lots of hard work. Despite these fears, there are still some who are interested to venture into it because its advantages outnumbered its disadvantages.
Researchers found that aside from jewelry, real estate property is considered a wise investment due to its high appreciation over the years, thereby ensuring your capital growth. Moreover, it offers investors lucrative business opportunities, benefits and financial security. To learn more about real estate property, read on and follow the guidelines mentioned below.
Definition of real estate investment:
It is the acquisition, management, ownership, rental or sale of real property for profit.
Before you embark and buy a property, it is best that you know the pros and cons of this investment.
Advantages of Real Estate Investment:
1. Tax benefits – You can claim several deductions from your tax return, like maintenance and repairs, rates, loan interests, real estate agents’ fees and property depreciation.
2. Safety – It is a safe investment because of the constant and increasing demand of real estate.
3. Negative gearing – You can claim tax deductions from it because the cost of keeping the property is more than the income you gained from it.
4. Long-term investment – It serves as a long-term investment for property owners because you can fund them until your retirement.
5. High leverage possibilities – You can purchase 80% of these properties through loan to valuation ratio (LVR) and 90% LVR with mortgage insurance.
6. Positive asset base – You can have numerous benefits when you invest in real property than taking another loan or investing in some other property. The real property you buy can be used as security when you plan to purchase another home or car.
1. Vacancies – There are times that property owners will experience vacancies in their commercial rental properties due to tough economic conditions.
2. Liquidity – You can sell these properties when you experience financial difficulties.
3. Bad tenants – Sometimes property owners encounter delinquent tenants who fail to pay their rent and leases on time. More so, some even refuse to leave the property even if it is past overdue.
4. Ongoing cost – Owning a real property is not that easy due to the ongoing maintenance costs associated with it.
5. Property oversupply – Lately, inner-city property developers built numerous properties which are difficult to lease out.
6. Capital gains tax – It is a tax implemented by the federal government on investment appreciation and payable disposal.
With all the facts and information presented above, you can weigh in carefully whether to buy or not to acquire a real property.