Global Advice Center

Beginner’s Guide to Investment Properties

Posted on Apr 9, 2010 11:24:23 PM

Whether you’re interested in building wealth to fund your retirement wishes, generating additional income, or simply want to understand more about investment properties, you’ve come to the right place.

Investment property works like this: you buy or build a dwelling (usually a house or an apartment building) on a piece of land, then rent it out to other people to live in. You make a profit on their rental fees, as well as on the natural appreciation of the property you now own. In other words, you’ll be collecting smaller but sustainable sums of money from the moment you begin renting the property out, and then when you decide you no longer want it you’ll likely be able to sell it to someone else for an additional profit.

Depending on your income needs and personal aspirations for the property, you’ll have your own timeline in mind for it. For example, if you’re looking to build your own long-term business out of one or more investment properties, you’ll need to plan on plenty of maintenance and upgrades. From renovating kitchens to replacing roofs, you’ll want to have a plan for everything–or at least an idea of what to expect.

On the other hand, if you’re interested in owning a property for only a year or two before selling it (for example, if you’re foreseeing a housing boom that you want to take advantage of), improvements will be less necessary and only minimal maintenance should be required. Use caution with this latter strategy, though; while the market’s trendline is always heading up over the long term, volatility is abound in the short term.

Once you have an idea of what your timeline and budget looks like, you can begin your search in earnest. Experts recommend joining property owner’s associations and landlord associations to facilitate networking with others who might have different needs but valuable information, and those looking to sell their property. Recently, foreclosures have skyrocketed. This means that for the long-term investor, deals are all over… but some are still better than others. Be sure to do your homework to understand the trends of a particular area and the structural integrity of the home so you can understand its real current value and approximate future value before you buy.

Best of luck, and come back soon for in-depth updates on this subject.