There are different assets to choose from, such as property, shares, bonds, fixed interest, options, warrants, CFDs… the list goes on. There’s also such a huge amount of information, from a wide variety of sources, that at times it can be overwhelming and off-putting.
However, investing in property has two major advantages that help make the investment decision much easier. The security associated with owning real estate, and the degree of control that the property investor has can provide that “sleep well at night” factor.
Why property can be a smart investment move
When it comes to security, property is excellent because it is tangible. It is a physical plot of land, often with a building on it that can always be seen and touched.
This tangibility certainly helps with peace of mind but it also means the investor will always own something.
Even if the property drops in value because of a downturn in the market, you still own it and you don’t necessarily lose anything too significant; you may just have to sit on the property for a little bit longer.
Remember Ansett, Ontel and HIH? These were once rock solid ASX listed companies that have since disappeared. Though the property market fluctuates, businesses in this era can literally disappear in hardly any time at all. You can be sure that your property will never disappear, even if your investment tactics to maximise it might need to change.
Property meets a basic need
Another reason property pays, is the fact it exists in response to a fundamental need. There is only so much land and everyone needs a roof over their head.
You might not find someone to buy your home the day you decide to sell, but the property is still needed in the long term.
This is different to investing in shares, options or warrants because these are not an essential aspect of day-to-day life.
If some kind of financial crisis arises, your shares may not be in demand. People would not consider investing in shares a necessity like they would having a roof over their heads.
People’s desire and abilities to invest are more volatile than the basic necessity of having a home to live in.
A greater degree of control
The other “sleep well at night” factor that property investors enjoy is the degree of control they have over their asset. If the value of your option, warrant or share is plunging, what can you do? Other than sell it at a discount price, there is only limited influence you can have.
This is different from property investment because you can make changes to the property to add value. A coat of paint, new floor coverings, or some furniture, can not only add value to the property but it can also increase the rental return.
Unlike companies which take a nose dive due to mismanagement, you can either manage your property yourself or use a professional property manager. If you’re unhappy with your property manager, you are in control and you can change the arrangement.
There are many choices the property investor has and this is a great benefit of investing in property.
Different assets have different strengths. However, in terms of security and the degree of control that the investor has over their asset; property wins hands down!
Peter Kouilzos, Realestate.com.au, 13 Oct 2014