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Updated: Mar 3, 2021

Investing in Real Estate has become as popular as many other traditional Investments. Real Estate investment includes both residential and commercial. In Australia, Real Estate investment has been on the rise for about 10 years. In other countries, depending on the property’s demand and supply, this investment is considering a traditional way to create wealth.

It is important to consider both advantages and disadvantages of Real Estate Investment before making any investment decision.

Advantages of Real Estate Investment:

1. Real Estate is a tangible and traditional asset, so it is easier to understand for most of the non-financial background investors.

2. From a tax perspective, the costs associated with investment properties may be tax deductible.

3. Negative or positive gearing are both valid tax strategies when investing in real estate depending on the real estate’s IRR over a period.

4. Property can provide long-term returns if the property’s price appreciates over time. 5. Home equity can be used to finance additional properties or unexpected expenses.

Besides many advantages of real estate investment, there are some disadvantages that investors should consider: 1. Compared to other types of investment, real estate investment requires large capital (as a home deposit) plus many other fees such as stamp duty, legal fees, repairs, etc. 2. An investment property can incur capital gain tax if the property is sold, just like some other investments. 3. As any other investment, investors hope for the price to be higher, however, there are some risks that may bring the property’s value down. 4. In a market downturn, investors who are holding many properties could wait for the market gradually go up, if they can still service their loans, unless their property equity is negative.

Disclaimer: The information provided is general information only. It does not take into account your circumstances. It’s important to consider your particular circumstances before deciding what’s right for you. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

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1 comentario

van minh pham
van minh pham
12 ene 2021

Thank you JENWM. It is very useful information.

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