Investing is one financial decision made by some people in the hope of earning money. There are many investment routes to take such as bonds, stocks, jewelry, and real estate. While it can be tempting to follow the footsteps of successful investors, it is of note that property investment is not for the fainthearted.
If you want to invest in property, say real estate in Baguio City, it makes sense to learn the ropes of real estate investments for amateurs to apply before taking the risks. It starts by weighing the pros and cons.
The Positive Side of Real Estate Investment
1. Capital Growth
Let’s say, for instance, that you have a house and lot in Baguio City. You bought it even if you don’t get to spend as much time in there as you would want. Still, it would pay dividends if you hold on to your property while its value increases. You could eventually rent it out to someone. Thus, aside from steady capital growth, you stand to enjoy regular monthly rental returns.
2. Safe Investment
Even if you happen to purchase the most unsightly house in the area or own a not-so-aesthetically-pleasing apartment in Baguio city, it will still increase its value over time. Real estate investment is not as saturated as other investment markets.
3. Moderate Risks
The property can be insured against almost any type of risks like fire, vacancy, or breach of contract.
4. Open to Everyone
This means real estate investments for newbies and the uninitiated is possible because it can be a venture even for individuals with no knowledge about it.
5. Individual Control
The investor can control and make decisions on whatever property investment is involved.
6. Tax Benefits
Your negatively geared property may provide you with tax benefits.
The Hitches in Investing in Real Estate
Unlike other assets, a house and lot in Baguio City can be tough to sell and takes longer to dispose when you need to liquidate it.
2. Involves Extra Costs
Apart from the initial investment costs involved in acquiring real estate, there are a number of hidden and ongoing costs to consider especially on a condominium for sale in Baguio City. This includes maintenance and repairs, land tax, utilities, homeowners association, insurance, etc. Other types of investments do not have such costs.
3. Income-less Periods
When no tenant is renting the property, you need to shoulder the mortgage repayments, which means you need to look for other financial sources.
4. Irresponsible Tenants
Bad tenants are a nightmare to owners, and this is especially true if you delegated real estate agents in Baguio City to handle the rental of your property. They can wreak damage to the property, lag behind payments, and even refuse to vacate the premises despite non-payment. Sometimes this can lead to costly and lengthy court settlement before resolution is handed down. By then, owners had enough stress and debts to handle to cover property expenses.
5. Other Costs
While negative gearing can merit tax deductions, real estate investment needs additional budget to cover shortfall between repayments and rental income, and to pay for the property when it is vacant.
Important Tips about Real Estate Investment for Newbies
Choose the Right Property. When hunting for real estate in Baguio City to invest on, look for one that has big potentials in terms of continuous demand by tenants or high promises for resale. Consider the appropriateness of the property being fitted to average age of residents around the area.
Research the Demographics of the Area. It is important to know the general demographic features of your target area and determine the needs so you can make the necessary adjustments to your property. For example, if you’re buying house and lot in Baguio City, make sure it has a properly working heating and ventilating system.
Forego Your Feelings. When investing on real estate, don’t make the crucial mistake of basing your decision on emotion, instead of finances and rationality. Do your research and establish your strategies to avoid a bad purchase that can result to big loss and capital growth that is not sufficient to cover basic expenses for maintaining the property. After all, real estate investments for dummies and non-experts also require detailed planning to ensure the right return for every penny’s worth.