Property investment basically refers to the different types of investments in land or buildings. The investment involves ownership, purchase, management, sale or rent of the property for profit. Investment in property is investment in asset and thus it can be considered as capital intensive and is dependent on flow of cash.
Know About the Types of Investments in Property
Buy to let: Buying it to out give on rent would be your regular source of income. Here, after buying a property the individual rent it to a single or multiple tenants on a monthly basis. Here, the ownership of the property still remains with the owner.
#1. The pros of this kind of investment are as follows.
- The property would be giving you a certain amount of money each month. However, you have to ensure it is always occupied by a tenant. At the end of the tenancy agreement, you have to find another one immediately; otherwise, you may lose income for months.
- There is no limit to the amount of money that you can earn through the property investment. The property can be occupied by tenants year after year as long as they pay the wages.
#2. However, there are some advantages for this type of investment as well. They are as follows.
- The landlord has to spend effort, time and even money in managing the property. If there are any minute issues in the property such as wiring, plumbing or other household issues it is the immediate responsibility of the landlord to take care of it and fix it as soon as possible.
- An additional agency can be hired for the well-being of the property, but it would lead to additional expenses.
- Renting the property can never lead to long-term profit.
#3. Buy to sell: Buying a property to sell in the future when the profit margin would increase. Here, normally the properly can be sold after a couple of years and the profit margin depends on the market value. After reselling the property, the individual would not have any control over that it.
The Pros of This Type of Investment Are Explained Below.
- The property can be sold after a short time if all other factors go in your favor. This would be giving you quite a lot of profit within a short span of time. This is one of the fastest ways to earn a lot of money faster than the ‘Buy to rent’ option.
- The property price has always had an increasing curve these days. It is quite unlikely that the price would decrease in the future days.
- One of the greatest advantages of this type of property investment is that after selling it you do not have to worry about the maintenance cost of the land. Here you also need not worry about ensuring a tenant always occupies the property, dealing with several tenants, listening to their numerous demands, deciding whether you would search for the tenant yourself or employ some agency to do so and numerous other things that you need to pay heed to.
There are several cons of this type of investment as well. They are as follows.
- It is always not likely that there would be profit in this kind of investment. Sometimes, it may be possible that the property may run in loss and thereby you lose every bit of your investment. Thus, it is always advisable to consult a financial advisor before investing such a huge amount.
It is mandatory to gain minimum knowledge about property investment before venturing into this field; otherwise, it may cost you big in this field.