An investment property takes many different forms. However, it is commonly recognized as a property that is rented for more than 180 days out of the year. This could be a property that you purchase for the sole intention of renting. It could also be a property that you currently reside in, yet rent a unit out of. Additionally, investment properties could be for commercial use or a place you intend to renovate and then sell. Find out more about what types of investment properties there are and how they benefit you.
Investment Property Types
Commercial Investment Properties: Many investors and corporations look to commercial investment properties for business purposes. They can provide a space for employees to work, used as storage, or rented out to others. Commercial investment properties offer bigger returns because of their versatility and higher rent profile. You can rent the space to small business owners or transform it into a commercially-owned apartment complex.
Residential Investment Properties: There are many ways to invest in a residential property. You can choose to rent your home instead of selling it right away, for example. Or, simply purchase a home with the intent to renovate and rent. Whatever the case, rental homes are a great way to supplement income with a long-term investment. Residential properties include single- and multi-family homes, condos, townhomes, and more.
Mixed-Use Investment Properties: Mixed-use investment properties make use of every space in the building. An example of a mixed-use property is a storefront with a rented apartment above it. This allows for multiple forms of income from a property.
Why Invest in Property
There are many benefits to investing in a commercial or residential rental property. For many homeowners who are moving, it can be a big decision whether to sell or not. Keeping the home as a rental investment allows you to keep the property for a while longer. If the value of the property increases, you’ll make more of a profit in the long run.
Renting a unit out also helps to manage mortgage payments, all while building the property’s equity. Plus, the consistent, long-term income could help build your credit or build a retirement fund. There are also many tax benefits when it comes to investment properties. You can deduct many of the expenses, including repairs, insurance, interest payments, and more.
What to Look For in an Investment Property
When it comes to your first investment property, it’s smart to play it safe. Look for a property that’s a sensible investment, like a single-family home in a desirable neighborhood. If you’re not into flipping houses, a property with minimal repairs or upgrades is key. When viewing properties, bring along a contractor who can help you identify potential upgrades. There’s also the potential of reselling in the future. Research the location’s buying patterns, neighborhood growth, and property taxes to determine if the property is a good long-term investment.
If you’re unsure whether you can handle the day-to-day managing of an investment property, our Aurora property management can help. Contact us for more questions regarding property investments and whether this is the next step for you.