If done correctly, property investing may safeguard your financial future, which is why careful planning is required rather than rash action. It’s critical to have a firm grasp on your short- and long-term objectives. This is why the real estate agents Wallan are always a good point to discuss about the advantages and disadvantages of investing in real estate.
Pros of Investing In Property
Security and stability
Property is almost always in demand since everyone needs a place to live. Although the property market has its ups and downs, it is less affected by market fluctuations and is more likely to yield fixed returns. As a result, real estate is a more solid and dependable investment vehicle than other options.
Positive cash flow
Given the high demand for housing, an investment property can generate a consistent source of passive income, particularly if the rental revenue exceeds the monthly repayments and maintenance expenditures combined. Your rental income can also be used to pay off the mortgage and other expenditures associated with the rental property.
Access to tax benefits
Tax deductions are available to residential rental property owners, allowing them to maximise their tax return on investment. Expenses related in the day-to-day repair and administration of the rental property, for example, can be deducted from your income, lowering your tax.
The value of your investment property, as well as your rental income, may increase with time, especially if it is located in a high-yield location. As a result, your cash flow may improve, resulting in positive cash flow, which you can utilise to grow your investment portfolio.
Build An Investment Portfolio
Long-term assets, such as real estate, can increase in value and boost your income flow. You can also utilise the funds to grow your property investment portfolio by investing in additional properties.
Doctors and other high-income professionals are frequently interested in expanding their property portfolio. They have a better chance of qualifying for an investment loan, even with an LMI waiver, because they are considered a low-risk applicant. If you’re just getting started and have a low salary, you might be able to get a loan for a little investment.
You can use the equity you’ve built up as the value of your property rises to invest in other properties. You can generate capital growth by diversifying your property investment portfolio.
Cons of Investing In Property
Lack of liquidity
Property investment would not provide you with immediate cash flow; unlike stocks, selling a property takes time. If you need money right away for an emergency, you won’t be able to cash in your investment.
High entry cost
The high cost of borrowing is one of the major deterrents for many Australians who want to invest in real estate. The cost of a deposit alone can range from tens of thousands to hundreds of thousands of dollars.
Because of the high costs, investing in real estate necessitates extensive planning and preparation. Mortgage payments, property taxes, maintenance and renovation fees, and insurance are just a few of the recurring costs of owning a home. As a result, having an investing strategy in which the revenue from your property outweighs all continuing expenses pays off.
For landlords, dealing with undesirable tenants may be a headache. Bad tenants not only create emotional distress, but their behaviour can also lead to financial losses, particularly if they consistently fail to pay rent or damage your property.