A loss occurs when the total cost of owning a property exceeds the total
income generated by the property. This can happen for a number of reasons, such as:
Depreciation: Property depreciates over time, meaning that its value decreases. This can lead to a loss if the property is sold for less than its purchase price.
Mortgage interest: Property investors typically borrow money to purchase property. The
interest on this loan is a cost of owning the property.
Rates and taxes: Property investors are typically responsible for paying rates and taxes on their property. These are additional costs of owning the property.
Maintenance and repairs: Property requires regular maintenance and repairs. These are additional costs of owning the property.
Vacancy periods: Property investors may experience periods of vacancy, when the property is not rented out. This can lead to a loss of income.