Investment Property | Type of Investment Properties
Are you searching for a type of investment properties that can help generate passive income or more wealth? Don’t look further than an investment property. If you haven’t tried investing, real estate will be an excellent choice you can ever have this 2020.
Why Is Investing in Properties a Great Way to Build Wealth?
A lot of people have been turning to real estate investment because of its potential to generate wealth over time. How is it possible? Take a close look at the following:
Investment Property | Retail Property, Office Property, Commercial Properties. Commercial Real Estate Investment Properties.
You’ve probably encountered cash flow more often than before. But what is it? Simply, cash flow is the total amount of money you have left from the collected rent after paying the necessary expenses.
Common real estate expenses include property taxes, property management fees, insurance, mortgage, and maintenance. When you invest in a property that captures more frequent rentals than the expenditures, it indicates that your cash flow is positive.
Appreciation On Investment
Another reason why investing in properties build wealth is rapid market appreciation. Depending on the location of the property, its value might increase every year without extra capital expenses.
Investors buy a property at a low rate and sell it at a high price. But it is not as easy as it sounds. It is always ideal to do some research before you purchase a property. You can also ask advice from an expert if the need arises. While the services require additional costs, your safety is not compromised.
Inflation affects different sectors in the US. But in real estate investment, inflation allows investors to create wealth without so many risks because it leads to home value appreciation.
While the monthly payment on a mortgage is the same for decades, both insurance and taxes increase gradually. This means the value of a property doubles while the expenses are controlled.
Annual Rent Rates
Inflation affects the cost of consumer goods. The rate of housing is no exception. The rent, for example, typically increases by 2.5% or 5% every year, according to experts.
So, it is common for owners to increase their rents. While the rate of rentals gets costlier than ever, the costs of managing a property are not affected by inflation.
Why Do the Wealthy Make Investments in Property?
Key: Return On Investment
It has been a trend that the wealthy make investments in property. Leonardo DiCaprio, for example, is one of the famous celebrities who have been investing in real estate for years now. In 2016, he listed his Malibu property for around $10.95 million, which is seven times higher than what he paid for it decades ago.
The potential of real estate investment to generate wealth, cash flow, or ROI is one reason why rich people have been turning to this type of investment.
Any type of investment always has risks. What many investors do is that they diversify their portfolio to balance rewards and risks.
Good Access to Other Investment Opportunities
Commercial properties have some of the best real estate investment opportunities. You can access apartment communities, mobile home parks, and self-storage deals as effectively as possible.
Consistency is crucial in all kinds of investments. Unlike stocks and bonds, real estate investment has been doing great for the past decades. Particularly, the sector has created more income, wealth, and equity over the years.
Types of Investment Properties
Whether you are a beginner or don’t know what type of property investment to try, this section presents different investment ideas that match your goals.
Retail property is the go-to option for aspiring and even experienced investors out there. It consists of retail storefronts, including strip malls and shopping malls.
In most circumstances, a property owner receives a percentage of sales a specific tenant store generates. Aside from the sale, investors acquire rental payments on a monthly basis. If you have interests in retail property, it is a good investment to consider this year and beyond.
Another good investment idea is an office property. Similar to retail property, this type of investment allows you to receive monthly rentals and other sources of cash flow/passive income.
If you have invested in retail property, go out of your comfort zone, and diversify your portfolio with office property investing.
In apartments, a person pays investors with a sum of money so that they can live in the property.
Usually, the length of their stay is dependent on a lease or rental agreement. In the United States, residential or apartment leases are on a 12-month basis. Still, it depends on the provider.
Under commercial properties, the medical office is another type of real estate you can invest in. If you have constructed a small building with individual offices, it would be excellent to lease them out to small business owners or other companies.
Instead of leaving them unused for years, letting people rent the offices guarantees a good ROI.
Since the market fluctuates, your rental rates could increase within a short period of time.
Similar to retail property, medical office, and apartments, self-storage generates sales from clients who use your facility.
Aside from the rentals, other significant fees can double the return on investment.
Other investment ideas include land and redevelopment and affordable housing.
Looking for a company to help you find the best investment property for you? Get in touch with us today to schedule a consultation.
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