Life itself is not a one way track. Ups and downs are two essential phases of life. It would be foolish to expect any business with-out its pros and cons. The only thing that matter is the risk percentage. There are very few options such as IRA, Roth IRA and bank fixed deposits, you can invest in without a sense of risk. Like any other business or investment product with promise of higher returns, real estate investment too has its share of risk factor. Let us discuss the pros and cons of investing in real estate in detail.
The very basic aim to make investment is to see your wealth growing with minimum of risks and to secure your future after retirement life. Land and housing is one sector where you can invest your wealth with the minimum of risk but lot of prospects.
While discussing about the pros and cons of investing in real estate, let us first take a look on pros of real estate investments.
The very 1st, advantage of investing in real estate is the tax benefits that you can avail. Interest paid towards mortgage, property maintenance expenses, operating expenses like property agent’s service charges etc are adjustable from your tax liability. You can also avail the long term capital gain by keeping the property with you for longer period of time.
When you invest in Wall Street with individual securities or mutual funds, what remains with you is just a piece of paper with promises but with investment in real estate a non movable property remains with you. It gives you confidence and makes you the owner of a property physically under your direct control. You can rent your property to gain regular rent income or you can put your property on sale any time you wish to liquidate your investments with price appreciations.
In case you don’t want to involve yourself in day to day dealing with rental business, you may avail the services of professional agents and can make yourself free to enjoy your retired life with peace. Properties are the second commodity after gold which has shown steady growth for decades. Investment value in property appreciates with much more higher rates than any other investment.
Over and above all these positive factors, you become your own boss and need not depend on others to take decisions. That saves your lot of time as you can take right decision at right time.
First part of the subject “pros and cons of investing in real estate” has already been discussed above; Now let us go through the cons of the real estate investment business.
Like any other business the real estate investment business also has its share of cons. Despite of all above positive factors, there are always possibilities of various draw backs. There are thousands reasons that the value of a property may go down. The value of property depends upon the locality and location of the property. The hot location of today may become discarded tomorrow because of bad elements in neighborhood or due to a new legislation by the local government or because of sudden lack of civil amenities by local municipal corporations.
You may be unlucky to have not so good a tenant to your property. Tenants always want much more than the worth they pay as rent. You may have to spend more on maintenance and repairs than what you planned. Natural calamity can put you in unexpected high expenses to keep your property in good condition. Also the market can take an unexpected downward trend and put you in loss.
Though there are possibilities of unforeseen circumstances which can convert your well thought and planned investment proposition in to a loss, but still the real estate investment is one of the best investment one can think of.