The question of whether real estate investing is worthwhile has come quite often. The problem is that people only consider their point of view and don't weigh the advantages and disadvantages properly. Below are a few of each that will help you decide whether you should or shouldn't embark on it.
First, the flexibility offered with real estate investing is incredible. Let's face it, most investments require a person to constantly be observing them and making changes to prevent any losses. However, with property investing, you won't get too stressed when it comes to maintenance. When you're starting out, you have to get the right property, letting agents, marketers and other people to help you get the right property and tenants. Afterwards, you can decide to either take a hands on or off approach. With the latter, you will have to employ a property manager. By choosing this option, you can sit back and collect your checks in the mail every month.
Another advantage of property investing is that it does not require a lot of capital to start. Assuming that your credit rating is good, you will more than likely qualify for a mortgage loan. If you choose this option, you will only be required to pay a small down payment. You can also work out the other payments. If you're lucky enough to get a very good deal, then the rent you receive from the property will pay for the other monthly payments.
Furthermore, property investing offers high returns. Granted, you will need to spend a bit more money than other investments. Supposing you were to buy a house for around $150,000. If the value appreciated by only 5 percent, then you would pocket an easy $7,500 in profit.
Property investors are also offered great tax benefits. All expenses for the house are tax deductible. Furthermore, if you are unable to get a tenant and your house was bought on loan, meaning you have to make mortgage payments, your property will not be taxed for that year. Moreover, if the value o maintenance and repairs exceed the amount the property is bringing in, then you are also exempt from paying taxes for that year.
Looking at the disadvantages, we see that investors aren't fully guaranteed that their investment will bring in decent returns. Yes, the value of land is constantly rising, but other market factors can come into play. The 2008 financial crisis did severe damage to the housing sector which still hasn't recovered. In fact, a large percentage of houses were foreclosed after the crisis.
Another problem with property investing is the lack of liquidity. Stocks, bonds, gold and futures are all quite liquid investments as compared to real estate. If you want to sell your house, you may have to wait a while as it may often sit on the market for a number of months and sometimes even years. Although this problem can be lessened by hiring a qualified real estate Agent, there is just no guarantee that your property will be sold quickly.
Lastly, the cost of maintaining real estate can be expensive. Generally, houses don't need a lot of repairs done. However, there are times when you may be required to do major repairs on the property and this may send your budget into disarray.
First, the flexibility offered with real estate investing is incredible. Let's face it, most investments require a person to constantly be observing them and making changes to prevent any losses. However, with property investing, you won't get too stressed when it comes to maintenance. When you're starting out, you have to get the right property, letting agents, marketers and other people to help you get the right property and tenants. Afterwards, you can decide to either take a hands on or off approach. With the latter, you will have to employ a property manager. By choosing this option, you can sit back and collect your checks in the mail every month.
Another advantage of property investing is that it does not require a lot of capital to start. Assuming that your credit rating is good, you will more than likely qualify for a mortgage loan. If you choose this option, you will only be required to pay a small down payment. You can also work out the other payments. If you're lucky enough to get a very good deal, then the rent you receive from the property will pay for the other monthly payments.
Furthermore, property investing offers high returns. Granted, you will need to spend a bit more money than other investments. Supposing you were to buy a house for around $150,000. If the value appreciated by only 5 percent, then you would pocket an easy $7,500 in profit.
Property investors are also offered great tax benefits. All expenses for the house are tax deductible. Furthermore, if you are unable to get a tenant and your house was bought on loan, meaning you have to make mortgage payments, your property will not be taxed for that year. Moreover, if the value o maintenance and repairs exceed the amount the property is bringing in, then you are also exempt from paying taxes for that year.
Looking at the disadvantages, we see that investors aren't fully guaranteed that their investment will bring in decent returns. Yes, the value of land is constantly rising, but other market factors can come into play. The 2008 financial crisis did severe damage to the housing sector which still hasn't recovered. In fact, a large percentage of houses were foreclosed after the crisis.
Another problem with property investing is the lack of liquidity. Stocks, bonds, gold and futures are all quite liquid investments as compared to real estate. If you want to sell your house, you may have to wait a while as it may often sit on the market for a number of months and sometimes even years. Although this problem can be lessened by hiring a qualified real estate Agent, there is just no guarantee that your property will be sold quickly.
Lastly, the cost of maintaining real estate can be expensive. Generally, houses don't need a lot of repairs done. However, there are times when you may be required to do major repairs on the property and this may send your budget into disarray.
About the Author:
Looking for a Milton real estate agent? You can now have access to an experienced professional real estate agent who will make your home-buying experience a great one! Century 21 273 Kent Street West, Lindsay, ON K9V 2Z8, Canada 705-324-2552
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