Investment Properties

We all dream of owning property be it real estate, vehicles, land or commercial buildings. One of the most profitable forms of investment in recent times is the purchase of investment property.

Investment property can be described as real estate property acquired with the aim of earning returns on the investment through rentals or future resale of the property. Such investment can be a long-term endeavor or a short-term investment such as purchase, remodeling, and resale of real estate at a profit. Acquiring an investment property and becoming a landlord is a lucrative venture that will provide you with continuous income for years to come. Just as the case with any long term financial investment, you need to conduct thorough research before choosing to buy an investment property. You'll have to make numerous important decisions during your property investment journey, and making the right choices makes the difference between a good and bad investment.

Important Considerations

1. The initial cost of the property.

Always consider the investment property you intend to acquire fits within your budget. It doesn’t matter whether you are getting a loan or paying cash for the investment property. You should work with a realistic budget and always stick to it. Your budget should include additional costs such as legal fees and taxes. You should focus on acquiring a property that you will manage financially.

2. Consider the property location.

The location of your property matters a lot regarding finding clients for resale or rental purposes. Ensure you research the market trends to find property located in areas where the property should be in demand. The investment property should have a potential to generate long-term capital gains. Always prefer property in an attractive neighborhood where people will want to buy or rent. You should consider how close the property can be accessed with quality transport routes, should have good schools, and public amenities such as supermarkets and shopping malls.

3. Consider the property target market.

Before deciding on which property to invest in, you must first have an ideal target market in mind. The target market should decide the type of property you acquire. If you intend to rent or sell to developed families, you may consider buying apartments with two or more bedrooms.

4. Consider the management of the property.

Managing your property should be of great concern once you have acquired it. You’ll have to consider whether to seek the aid of a professional property management agent or manage the property yourself. Hiring property managers mean additional costs but may save you time and stress from your tenants.

Pros

  • Stable Investment - Acquiring an investment property is the best way to invest as it is more stable than other markets. Investment property such as rental homes generates fixed returns to the investors in the form of rental charges.
  • Property Appreciates - Investment property located in prime location increases in value, generating more property if resold. The value of your property will be growing with every financial year.
  • Collateral - Property can be used as loan security. You can also utilize the existing equity in the property to acquire another loan or another investment property.

Cons

  • Cost - The initials costs of buying an investment property is very high. Numerous hidden charges further raise the buying cost which is why they are not easily affordable.
  • Time - Investment property such as real estate typically takes longer to sell. Many buyers will want to buy at low prices. Furthermore, property located in dangerous areas may take longer to sell and eventually sell at very low prices.

Once you consider all of these factors, you will probably end up with a good investment property that will bring reasonable rental returns in short to medium term and profitable capital gains in the long term.