1. Property can be both consumption and investment
A home you live in provides housing utility. An investment property is usually judged by rental income, appreciation and cost. Mixing those roles can distort return calculations.
Tip: Your residence can be valuable without being a high-return investment.
2. Property returns come from rent and price change
Gross return includes rental income and appreciation. Net return must subtract vacancy, maintenance, taxes, repairs, financing and transaction costs.
Tip: Use net return, not just headline rent or resale price.
3. Real estate is concentrated and illiquid
A large portion of wealth can be tied to one location, tenant market and regulatory environment. Selling can take months and involve high friction.
Note: A physical asset is not automatically low risk.
4. Leverage magnifies both gains and losses
A home loan lets you control a larger asset with less equity, but interest, EMI risk and falling property prices can make the outcome worse.
Tip: Leverage makes return calculations more complex.
5. Quick check
Your own home has no rent because you live there. Does it still have value?
Answer: B - A residence provides utility even if it does not generate rental cash flow.