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The Different Types Of Property Investment

When you want to invest a large chunk of money, a property is one of the best places to put your cash. The problem for most people is that they have no idea where to start when it comes to property investment. It is an absolute minefield and it’s always wise to learn about the varying options that are available before you start trawling the internet looking for the best places to put your cash.

There are two main types of property investment that are popular: buying a property to sell it on after doing it up and buying to rent out and generate a regular and secure income.  There are many different types of property out there that you can do either of these with, and you can choose to do it with commercial property, residential property, and even ranches. You can visit RMABrokers.com for more on that last one! Each of the types of property investment has their merits, and it’s going to come down to what you hope to have from your investment property which will dictate which way that you go with your investment. There are different pros and cons for buy to sell and buy to let, and you need to get as much insight as possible before you make the choice.

Buy-To-Rent

This is a pretty common way to invest in property, as the idea is that you have a passive income with a tangible asset that you could sell on at a much later date. Investing to let means you will be renting your property out to tenants. You could choose to screen these yourself, or you could hire a management company to vet and bring in tenants for you. The biggest pros of the buy to let property is having a regular income and making more cash. A passive income can come in many ways, but if you have it in the form of a property, you will always have an income as long as you have a tenant. Always keep on top of tenancy agreements, though, as you would need to replace a tenant each time one leaves. That is, however, the beauty of a property management company as they can keep your tenancies going.

When you make a profit every month, you’re going to end up breaking even on your property investment eventually. When it comes to making money, a property is the most secure way to go. Once you break even, you could invest in another property and start the entire cycle again. As long as you have tenants, you will always have a way to buy property after property.

The cons of buy to let come with being a landlord and the additional expense when you have to pay out for estate agency fees and listings. Being a landlord is a tough job, and you have to spend time and energy managing a property from a distance. You are the person responsible for repairs and doing those repairs in a timely manner. This can get stressful and it’s why there’s a downside to buy to let. The profit margin that you set for yourself can be down when you pay out for estate agencies, plumbers, electricians, and the tax man!

Buy-To-Sell

Think about Monopoly. You start the board in the poorest area and wind up in the most expensive. When you buy property in the poorest area, you play the game to collect rent or sell it on to buy new property. Once you buy and renovate a property, you can sell it on for a profit which allows you to buy further properties. Once you sell your investment property, it’s no longer yours to manage or collect an income – like Monopoly. The pros for buying property purely to sell it on are mainly the profit and the ability to manage one project at a time. By making a profit with each sale, you can buy more property and use any surplus to bank into savings. This then builds up money for your security in later life and gives you a financial cushion to fall back on. Property prices fluctuate so frequently that you can track the changes and sell at the best time for your property.

The cons with buying to sell come solely with the risks involved. You can never guarantee that you can see a return on the investment that you make. You could lose absolutely every single penny that you spend, and that’s a scary prospect. Getting the right property advice is so important, and you should never enter a sale alone and without guidance. When looking into property investment, knowing the value of your property can be difficult. This commercial property valuation service can really help you.

Whether you choose to buy a residential property, a commercial building or you choose to invest in a farm of cows, you need to work out where you want to place your money. Taking advice from mortgage advisors, the bank managers and real estate companies is vital to ensure that you make the correct investment. Usually going for the buy to let route is the best way to have both worlds. You can start by renting out your property and then, later on, decide to sell it. This way you can earn an income throughout your life before having a secure amount of money at the end of it.

Property is a good investment for those looking for long-term security on their money. There are, of course, plenty of ways to invest money. However, a property will always be the number one choice for most people. Understanding the risks of demand for rental and property prices fluctuating is important. You can ride out a slow housing market if you are willing to wait of course! If not, then you need to be ready to strike and buy property as soon as the time is right for you. Once you understand the different types of investment, you can make the best decision all around. Put your money where your mouth is and grab your investment with both hands.

 

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About the Author

Kaya Wittenburg

Blog Author and CEO

Kaya Wittenburg is the Founder and CEO of Sky Five Properties. Since the age of 10, real estate has been deeply ingrained into his thoughts. With world-class negotiation and deal-making skills, he brings a highly impactful presence into every transaction that he touches.

He is here to help you use real estate as a vehicle to develop your own personal empire and feel deeply satisfied along the way. If you have an interest in buying, selling or renting property in South Florida, contact Kaya today.

   
Feel free to call me at: (305) 357-0635
or contact via email: info@skyfiveproperties.com