Residential property offers a good investment avenue. However, like most other investments, you need to be careful when you invest in property.  For the uninitiated, the residential property market can seem like a maze, especially if you're thinking of buying a home for the first time. Making the right choice of properties is not very simple nowadays. This article gives a brief overview of the merits and demerits of investing in residential properties.
People buy residential property for two important reasons:

• For staying
• As an investment

Once you have fixed the budget for buying / investment, the most important factor that affects your decision of buying a residential or commercial property is location. By far, this is the single most important factor that affects the buying decision. Apart from location, the other factors to consider while investing / buying property is the type and utilitarian value of the building, the tax implications, liquidity of the property and legal aspects.

Advantages of Investing in Residential Property

• Expenses, including depreciation on the property and interest on your borrowings, are tax deductible.
• You make money as the value of the property increases.
• You can leverage your investment.
• You get rental income.
• For people who can't save, paying off a mortgage is an enforced savings programme.

Risks of Investing in Residential Property

• Interest rates could rise.
• The property could be untenanted for a period of time.
• You could get "bad" tenants.
• It could take up a lot of your personal time.
• House prices could remain static, or even fall.