If you’re looking for an investment opportunity then property certainly ranks high as an excellent option. With the right amount of planning and foresight you could see yourself sitting pretty and significantly increasing your personal wealth. While we are all well aware that there are risks involved in investing in property those potential pitfalls seem to dim in the shimmering light of the prosperity that can be found. But, the pitfalls are real and should be spoken about.
Here are some of the hard truths about property investing that you should bear in mind before you rush off to start your property portfolio.
You could easily land up with a vacant property
At some stage your property will be void of tenants and you won’t be earning. No one is immune to this concern and just about every property owner has or will experience this. This is particularly true if you purchase a property that is situated in an area that has a lot of rental properties around as the market can be fiercely competitive and your asking price becomes limited.
Maintenance eats into your profit
Maintenance can leave you at a loss.This is true in the case of the rentals game and if you purchase fixer uppers which you refurbish and sell for profit. If you’re renting out your property you will inevitably end up spending money on maintenance and the minute your tenant calls you to repair something you are expected to make magic happen and fast. You could easily find yourself handing over thousands to fix geysers, electrics, damp issues, structural damage and the like. If you’re still paying off your home loan on the property and your profits aren’t massive you won’t see a cent before the issues are sorted out and your tenant is happy. Similarly, if you are refurbishing a property to sell, once you have a buyer and they find something wrong with the property they will expect you to fork out cash to fix it before they purchase. This isn’t the case if you put a “voetstoots” clause in the deed of sale though.
It is not set in stone that your property will increase in value
No matter how much research you do, how much advice you ask for or property experts you consult with, your investment is not guaranteed to increase in value. Unfortunately, there is a gamble in this type of investment. When you’re ready to sell there might be a dip in the market or the area that is considered most popular now might fall into disrepute in the future. You cannot predict what might happen that is out of your control.
The property investment game should be played by those who can purchase but are not entirely reliant on their investment.
The listed negatives above must be considered when investing in the property market and it is ideal if you’re in a position where you can play a long game.