Real estate professionals like Isaac Toussie get a lot of questions related to the real estate industry. Especially when they work in one of the most dynamic property markets anywhere in the world, New York City.
In this article Isaac Toussie discusses the real estate business, an industry in which he has several years of first-hand experience. Isaac Toussie often shares his knowledge with others online in the form of helpful blog posts and articles just like this one. This time, however, let’s consider a different aspect of it all. Why, exactly, should one even own any property?
It’s an absurd question for a land developer such as myself to pose, maybe, but not so crazy for those of you who are considering real estate but may not be fully aware of all the dirty details that are involved. But as with most things in life, there is an inescapable yin-yang to real estate, too – that is to say, inevitable pros and cons associated with the ownership of property, even in this most fierce and proud bastion of capitalism and private property that is the United States!
So, let’s consider some pros, along with their corresponding cons, over the course of the next two paragraphs, respectively.
It goes up, up, and up. Real estate has historically seen much less fluctuation in value than other forms of investment. After all, a growing population only fuels demand, and frankly there is never enough room, especially in the metropolitan areas. Indeed, unlike other purchases, the value of real estate tends to go up over time. And if you’re a home-owner, you needn’t worry about rising rents every year or two, as all your costs are fixed, aside from the possible exception of property taxes. But, speaking of taxes, there are many tax benefits to owing property, as this is a social good that the government is keen to encourage (rather too keen, as recent events in the sub-prime mortgage industry has shown!). For example, you can deduct the cost of all kinds of repair; just be sure to save your receipts in case of an audit!
By the same token, however, those great benefits can very well be just the source of great problems, too: real estate values can certainly tank, and in fact they have tremendously these past two years. And you can be foreclosed on, as many people have found out the hard way as they find themselves with homes worth less than their mortgages, which they are unable to pay off. And then there are those taxes, which can go up from year to year, given the political winds.