Sunday, March 6, 2011

Ten reasons why I don’t want to invest in private property.

I have been thinking whether I should invest in private property in the future. After giving some thoughts on it, I realized that it is not a wise choice for me to make. I have listed ten reasons why I am not interested in investing in private property.

1) Buying and selling Stamp fee (these add up to a huge amount)

2) Illiquidity (cannot be sold easily)

3) Cannot be diversified (can only buy one, cannot do averaging)

4) Need to leverage (definitely need to take loan)

5) Maintenance fee (this will take away money each month)

6) Agent Commission (can be a huge amount)

7) Finding Tenant (difficult to find a good tenant that will take good care of your property)

8) Unpredictable Loan interest rate (interest rate may increase when market picks up)

9) Cannot grow in size (definitely the size of the property cannot increase)

10) Unpredictable events (you can never know what will be built beside the property)

3 comments:

Temperament said...

Hi,
I have been thinking almost like you all this time. Now I am reaching my 63 and I think if you can afford you better have an investment(free-hold)that won't monkeying around with you(stock investments)so much.
Anythings can happen in life.
But which investment is more stable for your retirement?
If you are still young, you are right. Why bother with all the hassle?

Createwealth8888 said...

if you can afford to invest in free-hold property, why not?

But, I can't. :-(

Eric See said...

at current price is not recommendaed but properties will indefinitely goes up with time. The key is time of entry like stock mkt.

Have you started your journey towards financial freedom?

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