Investing In Property – Total Commitment for the Long Haul

Property, together with cash, bonds, and shares, is one of the four most common forms of investment. Brisbane investing in property has many forms, from buy-to-let to property fund investment.

Before plunging in, you need to know how to invest in any of these, the different forms it takes and the risks involved.

Property investment has two main potential ways to make a return: rent (which you can keep as long as you want) and selling for a profit. This one are for properties you buy and later sell at a higher price. You need not buy properties directly but get your potential benefits through investing in a fund that invests in properties.

Some other ways in investing might involve via property maintenance and management services.

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Risks

Like most other businesses, items like property prices and demands can go up or down depending on current trends. Hence, direct and indirect investments are usually made by investors for the long term, waiting for favorable times to sell and buy to make a profit.

Buying at low prices and selling them high is norm. If you are willing to wait, you can sustain and ride out the losses in slow markets. The profits come in when times are better.

Over-investing

If you have over-invested (One example is having most of your money tied up in buy-to-let properties), you can be in terrible trouble when the housing market slows down.

The best way (aside from being the smartest method) to avoid this is the practice of diversifying your investment portfolio. This simply means having different kinds of investments. The low in one area is filled out by some good movements in the others.

Buying property

The risks in buying property directly are plenty, either buying for yourself or as a buy-to-let investment. First, your money is tied up for a longer time than the other forms of investing. (It takes time to sell property, unlike stock shares or bonds). The comparison is like putting many eggs in one basket.

There are also added hassles in buying and selling. There would be fees for estate agents and surveyors, stamp duty, land taxes, solicitor’s and conveyancing fees. Watch out for some other new taxes levied in buying homes or properties-to-let.

Other risks

Maintenance work and managing the properties can take much of your time and money. You need to extend the lease if you don’t hold the freehold outright. (This needs another negotiations time and money.)

There are other risks involved if you use a mortgage or a loan to buy property. First, there is no guarantee you will earn enough rent to cover your loan repayments. There is also the possibility that that cost of mortgage will rise. If you can’t keep up repayments, the banks can take back the property.

In addition, doing maintenance work and managing the property will have to take some time and money from you. You also might need to extend the lease, if you don’t own the freehold right. This is an added cost. Brisbane investing in property would need more from you.