Real estate is now considered as one of the most lucrative areas to venture to. This is because real estate properties are worth huge amounts of money and their values are almost always on the rise. Real estate investment involves the purchase, ownership, management, sale or rental of piece of property. But it’s not that simple. The business is also a very challenging and tricky industry to get into. So if you are setting your sights on this kind of investment, here are some of the pros and the cons that you should know about when it comes to real estate investments.
• Tax Benefits – Investing in real estate can give you some tax benefits through reductions of your tax returns. The interest cost can be deducted from your tax, whether they are from residential or commercial property investments. While the deprecation value of your property on the other hand, can be used to lower your declared income, which can reduce your tax in the process.
• Passive source of income – Rented or leased properties can supply you with a steady source of income, for as long as your property lasts. You’ll have a stead flow of cash coming, even without lifting a finger. All you need to do is to make that initial investment, develop the property, open it up for lease and reap the benefits of your business venture, for years and years to come.
• Asset base – Investing in a real estate property can serve as your positive asset base. This is extremely helpful when getting a house, car or business loan from banks or any financial institution.
• You can start small – You do not need to have a whole lot of money just to be able to get into the business. The United States for instance, encourages its citizens to own residential property. Thus by law, banks and other financial institutions are required to make property acquisition easy and very accessible.
• Vacancies for rented properties – A vacant property can mean no income for you at that particular period of time. Hence, you need to wait or look for someone who’s interested in renting your piece of land or building for you to start earning money again.
• Tenant issues – Most of the time, you’ll be leaving your property to people you barely know. And sometimes, you can end up with problems, such as tenants who refuse to pay or worse, damage your property. Problems like these can take quite some time to resolve.
• Tough competition – With the number of sky-rise condos and apartments available in the market today, competition is really tough. Because of this, you need to make sure that your property is always in top-notch shape to get the attention of potential buyers or leasers.
• High maintenance cost – Maintenance cost for real estate properties are always high, which is one of the main challenges for real estate investors.
Before you get into the business, take time to think it over. Remember, real estate is a very challenging industry but it is also one of the most rewarding.
Some good references to your real estate investment guide: