Advantages & Risks of Investment Residential Property

There are many advantages for you to invest in residential property.  These advantages are based on experiences, books researched, newsletters received & the valuable knowledge shared in meetings & forums.  It must be noted that these are the advantages and risks I have identified & as I'm no financial advisor or real estate agent, don't assume this as financial advice.

Advantages of residential property investment

Residential property investment offers many advantages, the main ones being:

1. You get rental income.

2. You make your money as the value of the property increases.

3. You can leverage your investment.

4. With newer properties, you can depreciate the building and fixtures, which can provide additional cashflow. 

5. Expenses including rates, depreciation, maintenance of the property and interest on your borrowings are tax deductible.

6. For people who cannot save, paying off a mortgage is an enforced savings programme.

Risks involved in residential property investment

1. House prices may become static or even fall.

2. Interest Rate Rise (however you can fix rates if you don't want to take the risk).

3. Bad tenants (although you should have landlord insurance to protect you from this).

4. Vacancy (can be reduced if you maintain your property in top condition).

5. Not conducting a thorough property inspection prior to purchase, being hit with a huge repair bill.

6. It could take up some of your time (less time if you have a property manager managing your portfolio).

Reiterating some of the residential property investment rules

• Research, Research, Research.  
• Location, Location, Location.
• People, People, People.
• Manage, Manage, Manage.  Look after your tenants and your property.
• Insure, Insure, Insure.  Includes building, public liability & landlord insurance.