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Real Estate Investment Myths Busted

For many people who simply don’t have the time or the mindset to trade more volatile assets, property investment is always a hot topic. Unfortunately, a lot of people who are looking to secure their financial future through this market are exposed to unfounded and harmful myths about real estate. Here are a few of the most common real estate myths, and the truth behind them…

It’s a Sure-Fire Way to Build Wealth

While property markets around the world have seen a major upturn in recent years, this is no real indicator of future growth. Many people have benefited from the rising prices, but many seasoned investors have been hit by a flipside of it as well. Various economical shifts in the nation and the world can cause surprise drops in the median prices of property in a given area, and come back to bite people who have already pumped a lot of their savings into the market. The choice to invest in property needs to be well-researched and thoroughly thought out. Yes, you should look at historical performance, but you should also consider local government development plans, population growth, and the availability of finance in a given area. Property investment can give you huge returns, but it won’t happen overnight, and you need to be prepared for the possibility of a slump.

Renovation Means Value

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This one is true, but only up to a point. Sure, having some renovations done on a property can make a house look absolutely beautiful, but that doesn’t guarantee a high selling price unless you’re planning to build a totally new property on some land for sale. Obviously, if you’re trying to add value to your primary residence, it makes sense to get your kitchen and bathrooms up to the same level as other properties in the area. However, blowing tens of thousands of dollars on a luxury bathtub isn’t going to help you gain big returns. In many cases, it’s necessary to spend money in order to make money, but standing out a little from the local comps can add a lot more value to a home. Instead of copying whatever you see in interior design mags, consider adding little quirks like a garden seating area on a well-kept lawn.

Property Investment Saves You Tax

This is among the worst possible reasons for someone to invest in real estate. You should only really invest in a negatively geared property if you’re absolutely certain of the long-term capital payoff. You’ll actually be losing out if you pour your money into maintaining a property that’s not reaping in any returns until it becomes positively geared or you come to sell it. Always remember to count the relevant duties and taxes when you’re planning to sell a property as well! Negative gearing of a property isn’t an investment strategy, but if it’s employed wisely, it can certainly lead to a positive cash flow. Still, if your property can’t generate enough to pay off your debts, you need to make sure it has the potential for significant growth in the future.