Buying a Home is a Guaranteed Positive Investment – A Myth Worth Busting Once More
Buying property has been one of the ways of investing money and earning more money. But, the people who engage in property trade are often people who know what they are doing and have already had previous experience doing it. Likewise, those people have at least one or two bad transactions.
To think that simply by purchasing a property you would be making a positive investment is completely untrue. Here are the reasons why.
The Value of a Property Changes Over Time
Some properties are worth more money than others and even when that is true, their value can change overnight, literally. Let’s say there is a shooting in the neighborhood where the property is, its value would tank significantly as it would immediately be considered a poor choice for future property owners.
This means that you might end up with owning a property which you cannot sell without loss, for an extended period of time.
The Property Itself Might Be Faulty or Undesirable
Purchasing a house which needs extensive renovation is not a good investment. You would end up with a property which you might not be able to sell for a long time. If the property itself is in a bad shape, you would need to invest more money for it to even become desirable. It should be known that prior to purchasing real estate, you should do research to determine which property is desirable and many factors can contribute to that. You should also not purchase a crumbling house.
The Market Might Be in a Downswing
The real estate market is cyclical and it might take some time for the market to start caring about your property or the location in which it is situated. Have in mind that market swings can last a while, an entire year or even five years. A piece of property is as valuable as the market thinks it is.
Renovation Does not Mean Purchasing
If you renovate a property and make it as shiny as you could, with everything up to modern standards, it might not sell due to many reasons. The market might be in a slow state, for starters and secondly, the location might be completely undesirable. Likewise, it could be out of financial reach of many, while the ones that could purchase it would not due to its bad location. These are all the factors which may make a renovated property irrelevant for some time. A property which was invested in is a loss of money, especially if it is unsold and the market is not looking in its direction.
Buying a property or multiple ones does not guarantee you anything except that you will spend money on making the purchase. Furthermore, it is worth knowing that a property might increase in value but it might also drop in value.
It requires experience to be a successful real estate agent or broker, for that matter.