When you hear the term Investment Property, you might have an image of Donald Trump staring across the Manhattan skyline surveying his vast real estate holdings dancing through your mind. But in reality owning an investment property is not something reserved exclusively for the super rich. For an increasing number of individuals owning an investment property is becoming a viable part of their financial portfolio.
Many people mistakenly use the terms “investment property” and “second home” interchangeably to describe real property that is not their primary residence. But in reality there are some genuine differences that should be defined before proceeding further.
In its simplest definition an Investment Property can be any home, building, office or structure that has been purchased solely to generate income. It is always different than a principle residence which has been acquired as a place for you and your family to live. In essence any real estate purchased to make an eventual profit has to be considered as an Investment Property.
Investment Property vs Second Home
In contrast a second home is a residence that you intend to occupy in addition to a primary residence for at least some portion of the year. Typically, a second home is used as a vacation property though it could also be a home that you visit on a regular basis, such as a condo in a city where you frequently conduct business. While a second home could have revenue potential, especially if rented out, it is normally not considered an investment property.
In a nutshell, an investment property is real estate purchased to generate a profit. In Nanaimo that investment will typically involve an apartment, duplex, condominium or other residential property that can be rented out. But an investment property can also be a commercial property such as office space, warehouses, workshops or any available space that can be used for business purposes.
Yet another example of an investment property, and one that has proven profitable in the past, has been ski lodges or chalets at places such as Whistler or Mount Washington. But thanks to the balmy weather the West Coast has experienced in recent times those chalets have tended to be under-utilized, which will dramatically impact their revenue generating potential.
A lack of snow pack not with-standing, a more typical investment property can be a worthwhile investment, and a useful portion of an individual’s financial holdings. The Nanaimo real estate marketplace is blessed with a large and diverse inventory. The multi-family residential selection is especially healthy with a wide range of properties available. Local rental properties come in a variety of styles, from homes constructed as duplex or triplexes, to high end condominiums right down to low end mobile homes.
Regardless of the property type there are some constants that are involved in owning one. Not least of which is the cost. Unless you are the aforementioned Donald Trump you probably will have to arrange a mortgage to finance your purchase, with all of the obligations and expenses that go with any mortgage.
The other inescapable consideration about a rental property is the fact that you will require renters if you want the property to generate revenue. If you have more than one property your problems are multiplied accordingly. Having renters also means that you as an owner are on the hook for finding renters, collecting rents, looking after maintenance, replacing or repairing appliances, property taxes, etc. Finally, once the renter leaves, you begin the cycle anew to locate a replacement.
Value Of Property Management Services
For many people owning an investment property can be an excellent financial choice. However for many they would rather pass the mundane property management details off to professionals equipped to deal with the day to day tasks of real estate ownership. Realty Executives Mid-Island’s Property Management team for example can assume the daily operational responsibilities for you, leaving you free to enjoy your life, and the financial rewards that come from your investment.
Investment properties come in a wide range of styles, and are more available as a financial choice than ever before. But as with any major acquisition it’s crucial that you do your homework prior to making any commitment. If you do decide to invest in a rental property consider the real benefits of employing the services of a property management company, to look after the daily tasks of keeping the property rented and maintained. Rental properties aren’t just for millionaires; they could be the right choice for you.