Let’s get straight to it:
Pros
Income: if your property is rented, you can earn an income
Less volatile: property values are often less volatile that shares or other investments
Capital Growth: the value of your property may increase over time
Tax benefits: you may be able to offset the interest on your investment property loan and property expenses against the rental income earned
Physical Asset: you can see and touch your asset
Cons
Costs: The rental income may not be able to cover the mortgage repayments and the expenses required to maintain the property
Rent demand: You are relying on good supply of quality tenants to rent the property and if this is not available you will need to be able to afford to repay the loan without the support of rental income.
Interest rates: If interest rates increase, your costs will increase but you can’t simply increase rent to cover this.
Not liquid: Property can’t be sold quickly if you need access to your money quickly.
Real-estate market fluctuations: if the property value decreases you risk owing more to the bank than the property is worth.
Property maintenance and management costs: You will need to spend time and money managing the upkeep of the property. You also need to consider council rates, building insurance, body corporate, property management fees, insurances.
High entry and exit costs: You need to consider stamp duty, legal fees and real-estate agents fees to both buy and sell the property.
If you’re thinking of property investing, talk to Court Financial Services for guidance on investment property finance.
