The Disadvantages of Investment in Property

There are several disadvantages for investment in the property market. It depends on the ecology of the economy of the particular country. Among them are:

Capital Requirements

These types of investment require significant amount of money. Depending on the investment, you may be required to come up with a large amount of capital as initial outlay. This factor makes it difficult for investors to purchase property and thus makes our investment is hard to liquidate.

Unpredictable Liquidity

Buying property is normally fairly easy. Sometimes it is harder to find a sound investment, but as overall there is always property for sale. The disadvantage to property investment is we never know how liquid our property asset will be. This is because the market greatly affects and is greatly affected by the overall economic situation. If the economy is in turmoil and lenders are not approving loans, it may be harder to sell a property. This requires appropriate investment decision. We don’t have to sell our property to make a return on your investment. In fact, there are several ways to earn a profit aside from selling or flipping a property. However, in the long run, investing in property market is still our best shot at a higher return on our money.

Risk

High risk normally will give high returns. More than likely we already know that in order to get big return, we must be willing to accept a certain level of risk. Like all investments, investment in property market has some associated risk. It is important that you take a moment and reflect on this fact. Property investing is not risk free. While there is potential to earn a great deal of money, there is also the chance that we will lose money.

The Art of Land lording

Managing any landlord is not an easy job. When y we invest in property, we almost always run into a situation that requires us to become personally involved with the tenant. How we handle landlordism will depend primarily on our interpersonal skills and the other individuals we interact with. Being a landlord can be time consuming and emotionally taxing.

In fact, land lording is a major deterring factor for some potential investors. It is simply too much hassle. Our feelings on this topic should be taken into consideration when looking for investment.

Changes Government Policy

Changing the government rules and regulations may also affect the property market. For example the increase of interest rate in the money market by Central Bank may increase cost of investment in the property for investors.

Management and Maintenance

Another disadvantage to invest in property is the requirement for constant maintenance. It is actually a busy business. We have to keep up on everyday living expenses such as the cost for a new roof, electrical repairs, plumbing expenses, etc. In order to get a sound return on your investment, we may need constantly enhance or upgrade our property.

How To Maximise Returns From Stock Investment ?

There are various ways to maximize the investment in the stock market. Among them are :

1.Invest in companies with strong financial position.This is important to ensure that the risk of failure of the investment in the long term can be reduced.

2.Set a target of investment returns.Profit-taking should be made ​​if the stock has reached the target investment.

3.Invest in companies that often provide a high dividend yield.This is a two-pronged strategy that investors have the opportunity to obtain dividends and capital gain.

4.Invest in companies backed by government.It can reduce the risks related to the government policy.However, this option should be carefully evaluated.

5.Invest in companies that have monopolies in certain industries.This can reduce the risk of competition in the business.

The Advantages of Property Investing

Property investing consistently offers a better return on our money than other traditional forms of investing such as stocks, savings certificates, commodities, life insurance policies, consumer merchandise, bonds and others. Property is extremely versatile. Most pieces of property come with a handful of options or different ways to generate a profit. Not only that, but property is almost always appreciating, and when it is not, we can use that to our benefit.

High Returns

One of the major advantages that come with investing in property is the prospect for high yields. It is not uncommon to see a profit average of 15 to 20 percent when investing in a piece of property. In fact, depending on the market, it is possible to experience an even higher yield.

Personal Control

Not all investing opportunities are created equal. When putting money into property, the investor is able to appreciate a higher level of personal control than when investing in alternative options. Each investment purchase can be crafted to fit the current situation and property. It can be refinanced, terms can be adjusted, and investors can rent or sell. Essentially these details are left to the investor.

Therefore, the investor gets to decide when and how to move forward with the investment. Maybe it’s not a good time to sell. The investor can opt to rent instead. There are several examples, but the point is, when we invest in property, we reserve the right to invest and sell under your own terms as determined by what personally and economically satisfies us.

High Leveraging Opportunities

Property investing offers the investor the best leveraging opportunities. For example, the cash requirements are not the same as they are with other investing alternatives like stocks and bonds that require the purchaser to borrow 50 percent of the value of the securities. In property investment, it is more common to invest between 20 and 40 percent of the value of the property. Furthermore, based on the market and particular situation, it is possible to invest with as little as five percent down.

Flexibility with Income Tax

Who doesn’t appreciate flexibility when it comes to income tax? When investing in real estate, the investor enjoys certain allowances and deductibles, subject to the policy which country that we are investing. Most notably, common expenses such as insurance premiums, property taxes, management fees, maintenance feeds, and other operating costs can effectively reduce your taxable income.