Is property actually a good investment? I'm a financial adviser and this is what I tell people.

As we’ve seen, you can win or lose with property. Just the same way as you can win or lose in the share market, every investment has its risks. 

Before jumping headfirst into property, there are a few things that are important to note. Firstly, there’s a common phrase, 'safe as houses' - the implication being that investing in property is always a fairly safe bet. I’d argue that’s not the case. 

Secondly, you need to consider diversification. Heard the phrase 'don’t put all your eggs in one basket'? If you were to choose property as your main and only investment, this is what you’d be doing. I’m not saying don’t do that, but I am saying just be aware of concentrating lots of risk in one asset.

Watch: 4 money hacks that don't cut out your daily cup of coffee. Post continues below.

Here are some of the key pros and cons of property investing:

Pros.

1. It’s real and tangible. Property is bricks and mortar and tiles and carpet. You can drive past it, visit it on weekends and even plan to live in it if your financial world goes topsy-turvy and that becomes necessary.

2. A tenant helps you pay off your asset. The cost of owning an investment property can be contributed to by the rent your tenant pays. If the rent covers the interest, repayment of principal and any other costs associated with the property, over time the income from your tenants could help you eventually own the asset outright, in full, while reducing how much you have to dip into money from your other income sources to pay it off.

3. You can leverage your money. When you invest in property, you’ll often get a mortgage. This allows you to take a smaller pool of funds - say $50,000 - and use it to leverage into a $500,000 investment, which increases your potential gain (and your potential risk).

4. There can be significant tax benefits. First, if your property is negatively geared - meaning the income from rent doesn’t cover the ongoing deductible costs of owning the asset - then the gap between the two figures (income and cost) can generally be claimed on your tax return. Second, if you’ve owned the property for at least twelve months and you sell it, you should be eligible for a 50 per cent capital gains discount. Third, you may be able to claim a tax deduction for other related expenses such as land tax, water charges, council rates, pest control, cleaning, repairs and maintenance, insurance, advertising fees to find a new tenant and more. (Refer to the ATO website for the most up-to-date information.)

5. It’s possible to negotiate. When you invest in shares and bonds, the price you pay is set by the market. When you invest in property, a huge range of variables can impact how much you pay and, as a result, it’s possible to negotiate the price.

6. You have ongoing expert help. Most property investors work with a property manager to help them take care of their property day-to-day, which means you have an expert on your team who can, ideally, help you maximise your income and minimise your pain - both financial and time.

Cons.

1. It’s (often prohibitively) expensive. You’ll need tens of thousands of dollars for the deposit, perhaps even six figures. Then you’ll need to take out a huge loan from the bank. In addition to the capital you need to start (the deposit), you also have to secure a mortgage.

2. Buying and selling costs are also huge. You’ll pay stamp duty, legal and bank fees on the way in. And then you’ll pay a whopping agents’ commission, possibly some capital gains tax and even more legal fees on the way out. These can account for tens of thousands of dollars - gone.

3. It’s not ‘set-and-forget’. Owning an investment property can be a really time-consuming exercise, even if you have a great property manager. There are the ongoing maintenance and repairs, along with replacing things when they break, and the work that comes with balancing the books and managing the paperwork. Expect to dedicate some time.

4. Property isn’t a liquid asset. When you invest in property, you’re essentially locking your money up. If you really need it in a flash, property is one of the hardest assets to extract said cash from, because you’ll need to either sell or refinance - both of which takes weeks, if not months.

5. Property management can be painful. Not all property managers are created equal. A great one will help you minimise stress and take care of daily hassles for you, but an inexperienced or overworked manager can make your property journey even more exhausting and time-consuming than it needs to be.

Bottom line: investing in property requires more time and energy than other forms of investing.

This is an edited extract from Investing with She’s on the Money by Victoria Devine. Published by Penguin Random House Australia, RRP $32.99.

See Victoria Devine live in Sydney, Melbourne and Brisbane. Tickets on sale here.

Image: Supplied

Feature Image: Supplied/Mamamia.