PROS AND CONS OF REAL ESTATE INVESTING IN NIGERIA
Pros
Cons
Pros
- Less risk and volatility than the stock market
- Can be a good source of cash flow
- Properties deliver good long-term return
Cons
- Not as much potential for aggressive return
- Can require a lot of cash
- Poor liquidity
- Dealing with tenants and building issues can be difficult
More Pros of Real Estate Investing
- Lower risk than the stock market: The housing market isn't subject to as much of the same volatility as the stock market. You don't have the same earning potential, but you can count on a steady incline most of the time.
- Steady cash flow: When you have enough rental properties going, you can generate a reliable revenue stream for your business.
- Good tax breaks: Real estate investors can deduct all sorts of expenses from their taxes, including mortgage interest, depreciation, property tax, and more.
- Long-term returns will usually be positive: Over time, most properties will appreciate in value.
More Cons of Real Estate Investing
- Potential returns aren't as high as the stock market: From 1991 to 2019, the S&P 500 gained over 600% while housing prices increased only about 160%.4 5
- Real estate investment can be cash heavy: If you really want to get a steady income stream going, then you need enough cash on hand (whether your own or loaned) to pay for building improvements, maintenance, possibly a management company, and more.
- Properties are not liquid investments: You can't turn a property into cash quickly like you can when you sell a stock.
- Managing tenants and building maintenance is a challenge: Whether you hire a property manager or manage it yourself, running a property is full of unexpected problems with overdue rent, roof leaks, power outages, and more.Further reading investorjunkie
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