Have you ever been to a lecture about finances? If you answer yes, you would know that they mostly try to convince you to invest for your future.
Of course, investment is important in making sure you have the needed expenditures later on in your life. Admittedly, investing in a property – whether it is a New Manila townhouse or stocks in a top performing company – is not that simple. In fact, there are a few pros and cons you would need to know about.
For those who are thinking of investing in real estate, this is your lucky day, for this article aims to discuss a few pros and cons you need to be informed of. Go and have a read below:
Pro: The Value of Real Estate Increases over Time
Real estate properties are one of the best things you could invest in because they offer you a kind of stability. Unlike other properties, the value of most real estate increases over time. This means that there is a possibility you could get twice the amount you paid for, if you decide to sell in the future.
Pro: A Real Estate Investment Meets Your Basic Needs
According to Abraham Maslow’s Hierarchy of Needs, one of the basic needs of people is a home to live in. Investing in a real estate property could provide you this. It may not be that common, but some landlords list down their investments as a potential home for them in the future. In case they might need them, they have a home that they could use later on.
Pro: Your Tenants will Provide you a Monthly Income
Another advantage to having a real estate investment is that you could decide to rent it out to tenants. Once approved, these tenants will be able to provide you a monthly income in the form of their rent. This means that you will have some extra cash you could decide to spend or save.
Cons: Real Estate Investments are not Liquid Assets
Unfortunately, real estate investments are not being considered as liquid assets. Liquid assets are the cash that is readily available to you.
Basically, this means that in case you need money immediately, you will not be able to use your investment to pay for that something. If you want to convert your real estate into cash, you will have to go through the whole process of selling it.
Cons: Property Maintenance could be a Problem
Regardless of whether you buy the property brand new or not, there will come a time when you will have to spend some money to maintain it. Homes and townhouses are susceptible to being run down, after all.
As previously discussed, your property’s value may increase. However, this is highly dependable on whether the property has been properly maintained over the years.
Cons: You could be held Liable for Accidents in your Property
One of the disadvantages of having a real estate investment is the high chance for you to be held liable for any accidents that occur in your property. This is another reason why maintenance is a must. You wouldn’t want your tenants getting hurt and end up suing you because you did not take proper care of your investment.
As you can see, investing in a real estate property is not that easy. But this shouldn’t discourage you from doing so, particularly if you are adamant about investing in one. Just be mindful of your responsibilities, and everything else should go smoothly.