Property is One of the Best Investments
The property has become an attractive investment vehicle. Many property observers like deifying investment here as if this is the best investment.
Even though like other investment vehicles there is always a risk to our investment. If a product or investment vehicle has its advantages, of course, there are also weaknesses.
In the previous article, we discussed the first weaknesses of the property, which are difficult to disburse, although in property classes and investment classes financial planners are also taught how to make your property 'liquid' or easily cashed when you need funds.
Well, what are the disadvantages of investing in property? We discuss together in this article.
1. Rising Debt Risk
Another thing that is also a weakness in property investment is its considerable investment capital. For subsidized studio apartments, for example, the price is in the range of $ 15,000 - $ 20,000. What if you want to invest in a second property, or buy a villa? Of course, it requires greater costs.
With prices like this, it is very rare for people to buy the property with hard cash. So, like it or not, if you want to invest in property and do not have cash, then someone will take a debt, be it KTA debt, mortgage or other loans that are considered more appropriate.
If not noticed, the ratio of debt to income and the default rate will increase. Of course, you don't want the property that you have repaid for months and you enjoy the convenience of being forced to be sealed by the lender?
Financial planners always remind that the debt to income ratio is only 30%. That is, the installments held every month should not be more than 30% of income. If you have an income of $ 1,500 per month, then the installments that you ideally have are $ 345 only.
And of course, you can ignore this number. For example, you want to add investment in property and take debt again, please. But, of course, there are other monthly needs that will be sacrificed. Whether it's a number of monthly shopping items that are eliminated or the cost of traveling with family that becomes very rare.
2. The Investment Is Not Too Developing
The value of the asset or the selling price of the property that does not increase when compared to the same type of property is an investment risk that can occur to your property. Maybe the bargain price is going up, but it's not much. Maybe the bargaining price is up, but the maintenance costs for your property are more expensive than similar types of property.
In fact, it's possible that you have placed a number of funds to buy an apartment as a second property, but the building hasn't been built as well. If this is the case, you have to be vigilant, lest the developer who offers the property to you is actually just a mess.
In some cases, there is even housing that turns out the majority to be the second property, so that in some conditions the housing becomes quite the ratio of occupancy. Not only seen and lived, but the tenants were also absent, plus the housing was ignored by the developer. If something like this happens, how can it increase its selling value, it doesn't look crowded.
Therefore, investing in property cannot be careless. Many factors must be considered before you invest funds. Location, developer, type of property are just a few things. You also have to look at the ratio and liquidity risk that might undermine the value of your property investment, and there is also a risk of debt that might destroy you and your family's financial condition.
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