Disadvantages of Real Estate Investment

Real estate investment, as interesting and profitable as it is, has its own advantages and disadvantages.

So, today we look at the disadvantages of real estate investment.

These disadvantages being stated here shouldn’t stop you from investing in real estate as all can be managed in the real estate business.

What are the disadvantages of real estate investment

Read: Advantages of Real estate investment in Nigeria

Real Estate Requires Management and Maintenance

Once you purchase a property, it must be rehabbed, maintained, and managed. Financing payments, real estate taxes, insurances, management fees, and maintenance costs can add up quickly, especially if the property sits empty or is being used.

If the units are being offered for rent, maintaining them to remain fit to be inhabited may cost will cost money. You may have to spend a lot on repairs, electricity bills and this makes a real estate property costlier to maintain.

Real Estate Has Higher Transaction Costs

When purchasing real estate for investment, you really need to consider other costs like surveys, agent fees, documentation, lawyer, and all that. While some people feel this can be ignored. Doing the right thing costs but it’s better than losing your investment.

But when purchasing shares of a stock, the transaction cost for the trade is very low, often just a few amounts of money to spend.

Time-consuming

If you plan to rent out properties, investing in real estate could be time-consuming. You may need to employ an agent or a manager to help oversee things. Doing that will lead to additional costs. Not easy doing all alone especially if you have many properties to check on.

Real estate property is very illiquid

Although you can sell your property if things get tough, the process is not as easy and quick as it is to sell other investments such as shares.

Legal Difficulties

You could have legal trouble as an investor or owner and this can cost money and bring strain to the person involved. An instance in dealing with a bad tenant suing you for misunderstanding.

Dealing with Bad tenants

There is nothing as worse as dealing with problematic tenants which can be any owner’s nightmare. They can severely damage your property, refuse to make payments, and sometimes even refuse to leave the property. Some disputes can take years to resolve and become very stressful.

There are no perfect investment avenues and real estate investment is no exception. For each advantage in real estate, there is at least one disadvantage.

Investing in real estate may be a great way of increasing your net worth, but it’s not necessarily quick, and rarely easy!

There you go on the disadvantages of investing in real estate. Kindly share!

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