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Types of Investment Property to Become Familiar with

Housing-Market / Buy to Let Sep 15, 2021 - 09:28 PM GMT

By: Submissions

Housing-Market

Real estate offers the opportunity to make money through rental income, appreciation, and profits generated by business activities. Nevertheless, you have to be ready to put down a considerable amount of money to begin investing. Property can be expensive. Therefore, you should plan your acquisition carefully and take into account taxes, repairs, utilities, and other mandatory expenses. There’s more risk involved in owning an investment property as opposed to investing in the stock market. To set yourself up for success, make sure that you’re ready to take the leap. Real estate investing isn’t for the faint of heart.
There are three main types of investment property you need to know. You’ll need a team of professionals to guide you through the buying process. If something were to go wrong, you should be able to reach out to the apt contractors to help you solve the issue in a timely manner. It’s recommended to do your homework. Do some research when putting together the team. Read as many online reviews as you can and consider asking friends and family for recommendations. 


What are the 3 main types of investment property?

There’s no denying the fact that property is a great financial investment. You have a source of stable and consistent income, stay ahead of inflation, and leverage real estate to build wealth and equity. Basically, you’re riding the wave and it’s your wave. If you’re looking forward to investing in real estate, become familiar with these types. It’s easy to get lost or feel overwhelmed.

Residential

Residential property, which is the most popular type of real estate investment, refers to property that is zoned for living for individuals or households. It encompasses homes, apartments, townhouses, vacation homes, and so on. As an investor, you purchase residential property and rent it out to tenants, collecting monthly rent. If the thought of becoming a landlord doesn’t sound appealing, you can buy the property and flip it for a profit. It can turn out to be a lucrative endeavor, especially if you’re handy and are capable of doing the renovations yourself.
The most important factors to take into consideration when buying residential property are:

  • Debt to income ration
  • Local market indicators
  • Mortgage rates
  • Supply and demand

Needless to say, you should select the city very carefully. Real estate isn’t monolithic in nature, which translates into the fact that each city witnesses different demand-supply dynamics. Keep an eye on cities that are experiencing rapid demand growth. Also, you’ll want to see if there are accessible socio-cultural amenities. People don’t want their children to travel long distances just to get to school. Neither do they want to go to the other side of town for grocery shopping.

Commercial

More often than not, income-generating property isn’t residential. Commercial property provides more financial reward, coupled with more risks. To put it simply, commercial property is space that is rented by a business. It encompasses offices, industrial factories, or retail. Maintenance and improvement can turn out to be high, so you have to dig deep into your pockets. The good news is that the lease for this type of property commands a higher rent. You’ll recoup your investment in no time. Not only does a commercial property have a longer lease, but also it requires a higher down payment.
The most important factors to take into consideration when buying commercial property are:

  • Location
  • Transport options
  • Restrictions to changes in the property
  • The likelihood of filling all the vacant spaces

There’s no point in buying a property if you’re not going to make any money. It’s a good idea to consult with a lawyer, an accountant, and a construction professional before taking action. You should really take professional advice before making any decision.

Mixed-use

As the name clearly suggests, mixed-use property can be used for both residential and commercial purposes. For example, a building can feature a storefront on the main floor and the upper portion of the establishment can accommodate residential units. Urban landscapes frequently offer such examples. Therefore, it’s not something out of the ordinary. Attention needs to be paid to the fact that mixed-use property can be found in towns and suburbs where zoning laws allow such arrangements. An ever-increasing number of developers are retrofitting shopping districts to increase the number of residences in the local area.
As a rule, mixed-use property is desirable for various types of tenants. Why? The explanation lies in the fact that they’re in close proximity to amenities and the area features good public transport links. Unlike purchasing raw land, which doesn’t produce rental income, mixed-use property is a wise investment decision. Nonetheless, it’s necessary to get a good understanding of the unique community environments and the people inhabiting the structure we’ve just discussed.
In what follows, we’ll highlight the different forms that a mixed-use property can take:

  • Main street
  • Compact office space with amenities
  • Live + work
  • Office + Residential
  • Shopping mall conversion
  • Mixed-use hotels
  • Retail district retrofit

Keep in mind that each type of investment property provides a fresh and unconventional look upon things.

If you’re looking for an alternative, why don’t you invest in REITs?

REIT stands for real estate investment trust. It’s basically a company that owns commercial real estate, such as hotels, malls, offices, and so forth. Individual investors can earn dividends from this type of real estate investment. More exactly, it’s not necessary to buy, manage, or finance the properties themselves. Sound tempting, right? Consider investing in shares of REITs. In case you didn’t already know, these companies return roughly 90% of their taxable income to their shareholders each year. If you purchase direct real estate, though, you have more control over decision-making. Nevertheless, the decision is up to you.

By Cynthia Madison

© 2021 Copyright Cynthia Madison - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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