In the long term property investment can be a very good source of high and additional income, but in the short term you are going to need a lot of money to make the initial investment because property doesn’t come cheap.
Most property investments, depending on which part of the country you live in, average out at sixty to seventy thousand pounds.
Ties money up
If things do start to go wrong with your investment and you are struggling for money then you have a large amount of capital tied up in a property which you can’t get use and is pretty much useless. This might force you to sell your property at a lower price and run a loss on your investment.
When old tenants move out it can take time to find new tenants and this is a problem because all the time the property sits stagnant you are wasting money. Property investment isn’t always rosy. Here’s why property investment doesn’t pay.
It’s all about Stocks
Property investment is often advised by a lot of people because it seen as the easy option for any potential investor. For a start it’s quite easy to understand the property marketing and also there are a lot of persuasive individuals who stand to make a profit from you investing in property. The truth about property investment is it isn’t as easy people make out, neither is it as profitable as if you have a house that is worth $400,000 that brings in around $20,000 a year in rent then that property has a price/earnings ratio of 33 times which is massive.
When it comes down to pure earnings then stocks far out perform property investment.
Can’t buy cheap
Property investment requires a large sum of money initially to buy the property in the first place, and it is this reason that people are excluded from investing in property.Put this together with the fact that the profit from property investment is dwarfed by other investments then you can start to see why property investment really doesn’t pay. Here’s why property investment isn’t a good idea, contact here direct property for more info about investment property.
Investing a large amount of money in property is always risky business because today more than ever the property market is very unstable and you are never sure that you are going to make a profit on your investment, unless you live in London or Hong Kong where up and coming property is rarer than rocking horse excrement. Every time you invest money in property you are basically putting a large amount of your money at risk for quite nominal returns.
It can cost you money
Because investment properties in Sydney are less expensive it can cost you low money. If you live in the property you are investing then some investors will find that paying the mortgage on the property will outweigh the mortgage repayment interest or if you are renting then the rent may not actually cover the mortgage payments on that property. In either case you find yourself paying more on your investment than is coming in from the property.