Advantages + Disadvantages of Investment Properties l Canny Group

Purchasing an investment property can be a very exciting time and can help build your wealth over time.  However, before rushing out to buy an investment property, it is important you consider the pros and cons which is why we have put together this article for you, introducing; Advantages + Disadvantages of Investment Properties l Canny Group.

ADVANTAGES

  • Provision of rental income to help top of other income
  • Help reduce income tax if the property is negatively geared i.e. the rental income is less than the interest on the loan
  • Potential capital growth in value of the property
  • Can be less volatile than shares or other investment options

DISADVANTAGES

  • Lack of investment diversification
  • A lot of money is tied up in one asset that can take time to sell
  • Buying and selling costs can be high
  • Tenancy risk. There is a chance your investment property will have periods of time where it is not tenanted.
  • You are responsible for all ongoing maintenance
  • Capital gains tax will be payable if the property is sold at a profit
  • Interest rate risk – a rise in rates will result in higher loan repayments and a potential reduction in net income
  • A substantial amount of capital is required from the outset

As always, we encourage you to seek professional advice to ensure the decision is right for you.  Get in touch with our team today to make sure you’re making the right decision for you!

 

Samantha Butcher – Financial Adviser

BComs Dip FS