Investment Property Guide

Online Investment Property Guide

The following is a simple list of investment property options to consider:

The Home or Primary Residence -The most basic form of property investment is homeownership. While most homeowners may not think of their primary residence as an investment, it can often be a significant source of wealth creation.

Second Home Investments - While a second home is usually a family getaway, it can easily be converted to a rental property and serve as a substantial property investment.

When purchasing your second home, it is imperative that you consider the resale value of the home. While it may seem affordable, it may not return a gain unless work is put into the property. In addition, the size of your second home should be a consideration. A small cottage may have less appeal than a larger home, making it a less desirable investment. Of course, scenic vistas (waterfront, etc.) and tourist areas make for successful second homes, which can be used as rentals while not in use by you or your family.

Rental Home Investments - The sole purpose of rental property is to generate income of and/or capital appreciation. There are many options in choosing the right rental home investment. In some ways, purchasing in low income areas is best because it usually results in a high income based on a low investment. However, rental properties in upscale and vacation areas are also deemed desirable. Just like playing the stock market, no single investment is necessarily the “right one” for everybody.

If you choose a rental home investment, determine if the property will result in positive cash flow by deducting your property expenses from the monthly income generated by the property.

Improvement Property - Purchasing property to improve and then sell can be very rewarding, both mentally and financially. However, it can also be quite risky. The key is to find a property at the right price. Be sure to project the realistic value of the home once it has been renovated. In other words, you may get a home at a rock bottom price and fix it up substantially, but if the area is not desirable, you are less likely to make a return on your investment.

Multi Unit Investing - While many investors tend to focus on single family dwellings as investment properties, multi-units, such as apartment buildings, are often gain a positive rate of return in a shorter time. The most obvious reason for this is that, as rentals, a multi-unit building will bring in more cash flow than a single family dwelling.

Other benefits of owning a multi unit building include the fact that all of your “problems” are under one roof, instead of throughout the city or state. In other words, six single family dwellings are harder to manage than six units under a single roof. There is also less competition in the multi unit housing market because everyone is too busy trying to get rich by flipping single family dwellings.