Purchasing Investment Property

Written by Lori Covington
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Purchasing investment property is a course of action many people consider when the stock market is soft and other financial investments have let them down. There are several strong reasons for purchasing investment property: the strongest may be the emotional security gained from investing in something tangible. Money and stocks can lose value on any given day. Real estate, being less liquid, is also less susceptible to momentary glitches in the stock market.

When you are purchasing investment property, you are making a commitment to a fairly long-term investment. Unlike stocks, you cannot dump real estate in a single day and try something new tomorrow. Unlike stocks, which will appreciate and depreciate regardless of your notice, real estate needs regular attention.

Maintenance, pest control, building codes, and tenancy issues all take time and money. You may hire a property manager to take care of problems as they arise, or you may do the work yourself, but either way, purchasing investment property also requires an ongoing commitment. When landlords ignore their responsibilities, tenants vote with their feet, resulting in high vacancy rates and losses in income and salability.

Purchasing Investment Property Makes Dollars and Sense

Many people prefer purchasing property to buying stocks for the benefits of having control over their investment. Stocks tend to be a passive investment. The market rises and falls and the investor's only choice is to sell or stay. With real estate, you can upgrade your investment at will with remodeling, painting, or landscaping. Income arrives monthly as rent rather than annually (or not at all), giving you more flexibility in financial arrangements. Finally, property can be used as security for loans, bolstering the argument that real estate's lack of liquidity is made up for by its inherent strength as a real asset.


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