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Friday, May 18, 2012

Myths of Real Estate

Many investors believe that real estate is the safest investment option. Several myths surround real estate as an investment, which can lead to disastrous results for investors. Here are some of the most popular real estate myths:
 1 Some investors wrongly believe that they cannot lose money by investing in the real estate. This is untrue as the properties are also prone to market fluctuations.

2 Even though property sale may seem to yield huge profits, the profits may not be as high if the cost of buying and selling, property taxes, and renovation costs are included.

3 Many investors also wrongly believe that real estate is the best tax preferred investment. This is untrue as other capital gains-based investments may yield even larger after-tax returns than property.

4 It is believed that investors have full control over real estate decisions. While this is true when it comes to a decision regarding where, when and how to buy the property, the owners will not have control over development in neighborhood and how it affects the property value.

5 Real estate is thought to be the best investment, offering great investment and returns. However, when compared to investment in stocks, real estate is not liquid and requires commitment of capital for a longer time period. Furthermore, property is also subject to market fluctuations, which can also adversely affect its price.

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