Property
Property investing is more than buying a home in order to lease it. It can also include buying commercial properties – such as storefronts or office spaces – and investing in property funds or real estate investment trusts (REITs).
Typically, property generates income for investors through rent. Increases in property values can also create returns for investors through capital gains.
Pros of investing in property
• Property can create reliable regular income streams for investors.
• Different property types and locations have different levels of risk, giving investors flexibility when constructing their portfolio.
• There are often tax breaks and benefits offered to property investors.
Cons of investing in property
• Property relies on having good tenants. Vacancies and bad tenants can jeopardise your income.
• Rising interest rates makes property ownership more expensive and eat into you returns.
• If the property market suffers a crash, your portfolio could end up being worth less than the debt you took on to purchase your properties – meaning you’re in ‘negative equity’.
How to invest in property:
Investors can access the property market directly by simply purchasing the property they want outright, or they can invest through funds and trusts. Like infrastructure, property funds and trusts can be divided into listed and unlisted opportunities.
Listed funds are more liquid, but their prices are more volatile.
