Those in the know know that real estate investing is a high-yield investment. Compared to the purchase of separate buildings, the acquisition of an investment property has many advantages. However, one should not rush into such an investment without having well studied all the crucial points around the subject. Thus, we elaborated this guide to help you to see there more clearly. So, without further ado, let’s dive into this blog and learn everything you need to know about property investment.
What is an investment property?
The term “investment property” appeared in the 18th century. At that time, it referred to buildings erected in Paris for rental purposes in order to “bring in” money on a regular basis to their owner. Several dwellings with identical structures made up this type of building. This term has remained in use until today to identify the acquisition of a group of lots comprising the same property by a single owner (natural or legal person).
The latter rents each of the lots in order to generate recurring rents. Thus, the building of report is quite different from the building in joint ownership, the latter being held by several owners who share the lots. Other less common terms such as “investment property”, “investment house” or “rental property” are also used to refer to investment property.
What to consider before buying an investment property?
Real estate investment experience
Although the real estate investment offers are tempting, you should avoid buying an investment property if you do not have enough experience. As a future landlord, you must first take theoretical training courses, particularly on taxation, administrative management (tax returns, tenant management, etc.). Nevertheless, this is not enough.
You will have to complete your knowledge with field experiences in order to better understand the functioning of this investment. To do this, it is strongly recommended that you start with a small property, such as a studio apartment. This is a sort of foretaste of your future large-scale project that will allow you to gain more experience.
The choice of the building
The competition is tough when it comes to the real estate market. For several years, it has become difficult to find the rare pearls. Indeed, individuals, communities, professionals and SPCI are all in the race. In order to succeed in getting a golden deal, you have to know how to use all the means: consulting classified ads (newspapers, social networks, website…), using a real estate agency, exploiting personal networks…
The quality-price ratio
It is quite obvious to want to buy a profitable building, that is to say one that can compete by offering more advantages, but at the same price. Potential tenants are always attracted by a renovated, well-equipped property that can meet their requirements. It is therefore important to study the needs of the local market in order to find tenants quickly.
Those who wish to live in large cities, for example, will prefer to buy a one- or two-bedroom apartment or a loft located in a secure residence with a parking space. On the other hand, tenants who prefer to move away from the big cities will rather look for a more spacious apartment such as a T4 or a townhouse.
Location of the building
Depending on the type of tenants you wish to attract, you will choose the location of your future investment property. If you are targeting families and young professionals, it is interesting to propose apartments located near the city center. You should also consider a location close to schools, university centers, green spaces, shops or dynamic employment centers.
Advantages of investing in an investment property
The purchase of a building of report is more advantageous compared to that of another type of building for several reasons:
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- Relatively low acquisition price and operating costs
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- Better overall rental profitability
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- More simplified management
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- Spreading of risks over several lots and tenants
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- Possibility to rent the lots little by little at an interesting price
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