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Property investment is for people
who:
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1. Want
capital growth rather than cash return ...
Buying property without borrowings will yield quite a high
cash return but relatively low capital gain. Most property
investors gear up their property by borrowing, which cuts down
the cash return because some of the cash income is applied to
interest payments but increases the capital gains.
(See
Gearing for further details.)
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Most property
investors gear up their property by borrowing.
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2. Do not
mind waiting for their returns ...
Property investment is for long term, at least three to five
years. Further to this aspect is that property is not a liquid
asset, in that if you wish to get out, cashing up your
property investment may take time. Investment in shares, unit
trusts, government stock and interest-bearing deposits can
usually be cashed up within days, if not instantly.
Properties, on the other hand, take weeks if not months to
sell.
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Property investment is for long term.
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3. Are risk adverse ...
While property investment can be risky for those who purchase
lower quality properties with very high borrowings, for astute
investors, property investment is relatively low-risk.
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Property investment is low-risk.
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