What Are The Pros And Cons Of Investing In Property?

What Are The Pros And Cons Of Investing In Property?

Investing is a choice that many Australia’s will make at one point or another.

After speaking with hundreds of investors the majority of us invest to:

  • Create a better lifestyle for our families
  • Create a better lifestyle for ourselves.
  • Take control of our lives.
  • Achieve our goals.
  • Reduce our dependence on our jobs.
  • Achieve financial independence.
  • Create a more secure future.

There are pros and cons to any form of investment, therefore its important to weigh up the pros and cons of investing in property before entering the market.

Table 1: Pros and Cons of Investing in Property

Pros Cons
Capital growth Liquidity
Security Hidden and on-going costs
Mitigate risk Rent free periods
It’s easy to get started Bad tenants
Control High entry cost
Tax benefits and tax breaks Changes to interest rates
More millionaires have been created through property than any other form of investment Over supply
Income that grows
You can buy it with someone else’s money
You can add value
You don’t need to sell it to access the growth
Most forgiving
It’s easier to research than stocks and shares
Its relatively easy to get finance
You can use leverage
Different strategies (Long term growth, positive cash flow, adding value, renovate, subdivide, develop)
Price is flexible
You can use your super
Its easier to hold onto if things go bad
Not just investors in the market
Demand is currently outstripping supply in Australia
Limited immunity from fluctuation
The governments got your back
Australia’s economy is relatively stable
You benefit from government and company spending

I will elaborate on a couple of the pros and cons of investing in property a little further:

Pros of investing in property:

Capital growth

Property has traditionally grown in value over time. Not only can property investors benefit from steady capital growth, but they can also benefit from regular monthly growth.

You can use leverage

Borrowing to invest in property means you can get access to one of the oldest and most powerful tricks in the wealth building book: leverage.

You can borrow more when you use a property as a security compared to using a share portfolio.

Lenders will often lend up to 95% of the value of the property, whereas they may only lend up to 50 or 60% of the value of a share portfolio.

This greater borrowing power allows you to benefit from the capital growth of a larger asset.

Cons of investing in property:

Liquidity

Although you can sell a property if things get tough, the process is not as quick as it is to sell things like shares.

Changes to interest rates

With interest rates rising and falling owners of properties can be left in a position where they can no longer service their debt or be left holding properties with high out of pocket expenses.

Looking to buy an investment property in the next 12 months? Learn more about how we can help you here…

The information contained in this blog is for informational purposes only. No responsibility can be taken for any results or outcomes resulting from the use of this material. While every attempt has been made to provide information that is both accurate and effective, the author does not assume any responsibility for the accuracy or use/misuse of this information.

I am not a lawyer, accountant or financial planner. Any legal or financial advice that I give is my opinion based on my own experience. You should always seek the advice of a professional before acting on something that I have published or recommended.

Ben Everingham

About

Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.

One thought on “What Are The Pros And Cons Of Investing In Property?

  1. real estate seems to be the best and safest investment. Even the banks agree. They don’t even have to tell you. You know because you know that asking your bank for money to invest in stocks, gold etc. will not go down well haha. But if you ask for money to invest in a well presented real estate deal, majority of the time – green light

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