People often point to buying property as a safer alternative to investing in stocks and shares. However, there are some reasons why they shouldn’t do so.
First off, if you’re looking for a quick return, then investing in property is probably not the right option for you. If you’re looking to build wealth over time, then you should consider the long term potential of property versus other investment options.
Property tends to appreciate over time, whereas stock markets fluctuate wildly – making it difficult to predict which direction it’s likely to move. This makes property less attractive to investors who are looking for short term returns.
The second reason why people should avoid property is because it’s not always a good idea to invest in real estate. Some types of property, including commercial buildings, tend to depreciate over time. And even residential properties can lose value if you live in them for too long.
So whether you’re looking to invest in property or not, here are some reasons why it’s a bad idea.
1. Property is a tangible asset.
Stocks and bonds are intangible assets. When you purchase property, you are actually purchasing something physical. In addition, when you sell your property, you receive cash in return. On the other hand, when you sell stocks or bonds, you usually receive stock certificates or bond coupons.
2. Property prices are rising.
There are many factors that influence the price of the property. However, the most important factor is supply and demand. As long as the demand for property increases, the price of the property will increase.
3. It is a good investment.
Many people think that they cannot afford to invest in property. However, with proper planning, you can still invest in property. Investing in property is a great way to generate passive income. Passive income means that you do not have to work very hard to make money. All you need to do is sit back and watch your investments grow.
With stocks and bonds, you pay taxes every year. However, with property, you only pay capital gains taxes when you sell your property.
5. Safe investment.
Stocks and bonds can go down as well as up. However, a property does not fluctuate like stocks and bonds. Therefore, it is considered a safer investment.
6. Hedge against inflation.
Stocks and bonds tend to lose value when inflation rises. However, property tends to appreciate in value when inflation rises.
7. Retirement plans.
People often retire early when they reach their golden years. However, they may not have enough money saved for retirement. Therefore, they look for alternative ways to save money. One of the alternatives is to invest in property.
8. Rental income.
If you own a house, you can rent out part of your house to tenants. This is a great way to earn extra money.
9. Diversify your portfolio.
Some investors believe that they can never lose money in stocks and bonds. However, this is not true. Even though stocks and bonds can go up as well as down, they can also go bankrupt. Therefore, it is wise to diversify your portfolio by investing in property.
10. Second homes.
If you live in a city where the cost of living is high, you might consider buying a second home outside of the city. This is a great option if you want to enjoy your vacation without spending a lot of money.
Where should I buy property in 2022?
It’s usually best to purchase property in key locations that are likely to remain popular in the long term.
What advice do you offer to investors and homebuyers?
It’s usually recommended investors and homebuyers to contact local advisors for professional guidance.
How much can a property generate?
As a guide, currently, you could expect between 5% to 10% ROI (return on investment). Above 10% it would be a good ROI already. However, this is highly dependent on different factors.
What are some short-term concerns?
For example, as a result of the global pandemic, we believe there will be an economic downturn, causing business closures.
What are the potential opportunities?
Quality real estate in first-rate locations historically rides the storm of market dips, and with professional guidance, opportunities with significant uplift potentially can be found.