What are the Pros and Cons of Investing In Property?
There are many reasons for investing in property, but there are also some potential drawbacks to consider. Here are some of the pros and cons of investing in property to help you make a decision.
Contents
The Pros of Investing In Property
Stable Investment
Property is typically a stable investment because the demand for housing is always there. People will always need a place to live, and the number of people in Australia is constantly growing. This means that even if there is an economic downturn, there will still be a demand for property, and your investment should remain relatively safe. This doesn’t mean that property prices won’t ever fluctuate – factors such as interest rates can negatively impact property prices.
Potential for Capital Growth
Another reason to invest in property is the potential for capital growth. Over time, the value of your property can potentially increase, and this can provide you with a potentially excellent return on your investment. This is especially true if you invest in an area that is growing in popularity or is undergoing redevelopment.
Generate Rental Income
Another way to make money from your investment property is to rent it out. This can provide you with a regular income stream to help you cover your investment costs and possibly make a profit.
Tax Benefits
Investing in property can also provide you with some great tax benefits. For example, you can claim depreciation on the value of your property and any fixtures and fittings you have installed. This can help to reduce your overall tax bill
Build Your Wealth
Investing in property is one strategy people employ to build their wealth over time. It can provide you with a regular income, the potential for capital growth and tax benefits. So, if you are looking for a way to invest your money, the right property for your situation and goals could be a great option.
The Cons of Investing In Property
High Up-Front Costs
One of the main drawbacks of investing in property is the high up-front costs. You will need to have a large amount of money to buy a property, as well as cover the associated costs such as stamp duty, legal fees and any immediate repairs.
Maintenance Costs
Another consideration is the ongoing maintenance costs of owning a property. You will need to budget for repairs, insurance and council rates. If you rent your property, you will also need to factor in the cost of things like property manager fees, advertising and the occasional vacancy.
Vacancies
If you are renting out your property, there is always the risk of vacancy periods where you don’t have a tenant. This can be a problem if you are relying on rental income to cover your costs.
Low Liquidity
Another downside to property investment is the lack of liquidity. This means that you cannot access your money as quickly as you could if you had invested in something like shares. If you need to sell your property quickly, you may not be able to get the price you want.
Choose the Right Investments for You With Help From Central Coast Financial Planning Group
As with any investment strategy, there are also pros and cons to investing in property. Property investing can be a great way to build long-term wealth, generate passive income, and diversify your investment portfolio. Of course, risks are involved, but with careful research and due diligence, these can be minimised. Including property can be a great way to build a well-diversified investment portfolio.
Seek the help of a reliable investment adviser here at Central Coast Financial Planning Group. We have a team of financial advisers to manage your investments and assist you in making sound financial decisions. Call us or book online to secure your first meeting with our advice team today!
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
