There are many upsides to investing in property even during the current market correction phase that seems to have been going on for several years. Notably it is currently and will continue for some time to be a buyers market. There is the added fact that more people are going to have to rent in future which should underwrite rental incomes.
Property Investment Down Sides
- Property is harder to turn into cash than stocks and shares. With property you have to wait for a buyer to come along. You can sell a quoted share or batch of shares quickly through a broker.
- Buying and selling a property is a complex and time consuming business even when you have a willing buyer and willing seller.
- Investing in property is expensive generally needing at least a three figure sum. Costs need adding including stamp duty, renovation costs, legal and other fees, the list goes on.
- A large deposit and access to mortgage funds is required to make a property investment.
- Profits on sale of a property will be liable to capital gains tax unless it is your main residence.
- Property is a high maintenance investment.
- Ongoing costs, insurance, utilities, council tax, mortgage payments, service charges can all add up to a tidy extra sum.
- There may be special risks with special properties.
- Unless you are wealthy you may have all your eggs in one investment basket. You need to spread risk if possible.
Special Property Investment Downsides
- Leasehold property has its own risks.
When the lease runs out the property reverts to the freeholder
The shorter the lease the more rapidly the value diminishes. - Flood plain property or that nice holiday cottage on a cliff edge can become a serious liability. Insurers are taking a tougher stance and property values can collapse or disappear rapidly.
- Overseas property has legal and political risks attached. Rule and law changes can adversely affect non-resident owners.
- Heavily leveraged property with significant debt can lead to added stress for the owner.
To bowdlerise a phrase is your house half full or half empty?
To get a balanced picture read Upsides of Investing in Property
