Thinking about getting into property investment but wondering how the positives and negatives balance on the scales? No problem! Let’s take a look at the pros and cons of property investment and how to make the most out of your investment in property.

Let’s take a look at the cons first:

  • It used to be that your rental income wouldn’t cover your mortgage payments but in Australia’s funny property market – interest rates are at an all-time low and in fact, rents are usually higher than your mortgage payments.
  • You are, somewhat, at the mercy of interest rate rises and it’s important to budget for repayments not just at today’s historical lows but for possible future rises in interest rates too. If rates should rise, you might have to contribute a little above the rent for a while before rents outpace the new repayment levels. That’s why I advise people not to stretch themselves to their absolute limits when investing in property – leave a little breathing room.
  • It can take a little while to realize returns on property. This can be a minor problem if you need money immediately but for most investors it’s really a good thing. If it takes a little time to sell your property – it encourages you to stick with the investment long-term and get the most from it.
  • You may have to cover the rent if there are no current tenants. The way to hedge against this is to find properties which are in highly desirable rental locations; don’t buy an investment property because you like it – buy it because tenants want to rent it.

It’s true that there are potential downsides of investing in property but smart investors make the downsides work for them and then they can become upsides.

The pros are very clear, however:

  • When you own property, you own something tangible. You can touch bricks and mortar unlike the percentage of a business you buy when you buy a share. It’s something real and there will always be a need for people to have somewhere to live.
  • You don’t just benefit from having someone else pay off the mortgage (which is an appreciable return on your investment) but you also benefit from capital gains in the equity value of your property. In short, investing in property pays out twice on the same investment.
  • There are tax breaks on mortgages and even rental income depending on how you structure your investments too. That can be a third source of return for property investors.
  • Property investment is not volatile in the way that shares or commodities can be. Sure, the market may have a little downturn every now and again but the on-going long-term trend in property is rising value. There are more people in the world every single day but there is no new land. Property will always be in demand.

Want to learn more about becoming wealthy through property investments?