March 2, 2008
Private Property Investment
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If you’ve decided you want to invest in real estate, there are several types of private property investments that you can choose from. Fixer-Uppers The first type of private property investment is buying houses, buildings, condominiums etc.,... |
If you’ve decided you want to invest in real estate, there are several types of private property investments that you can choose from.
Fixer-Uppers
The first type of private property investment is buying houses, buildings, condominiums etc., and then repairing them to increase their value. In the end you will probably be able to sell the private property investment for a higher price than what you paid for it and you could make some profit. However, don’t underestimate the cost that goes into buying, fixing up and selling a house in terms of work, time and money before you decide it’s a profitable investment. You should also keep in mind that there are different tax rules for purchasing and selling a house that is not your main residence.
Rental Property
Another option is to invest into real estate for rental properties and receive a constant income from renting the place. You might eventually be able to sell it at a higher price. However, this type of private property investment will turn you into a landlord, with all the hassle that come with it. Common problems include dealing with destructive or nonpaying tenants. Even if this doesn’t happen, you still have to take care of the upkeep of the real estate. You may also hire a specialized company to handle the management issues if you don’t want all the hassle.
Unimproved Land
This type of private property investment will allow you to hardly make any profit. Unless you are lucky to get a very desirable piece of land at a good price and the neighborhood doesn’t keep you from using it profitably, you are most likely to pay more for owning it than you could make from selling it. You will have to pay property taxes, as well as upkeep costs, and you will not get any income from renting the place.
Second Homes
Vacation homes or second homes should not be regarded as a private property investment, but used only for vacation purposes. Renting the place is not a profitable business, as the cost of owning it will probably be higher than the revenue you can make.
Timeshares
Timeshares are most likely to be the least profitable private property investment ever. They refer to buying a given period of time (one or two weeks) during a specific period of the year in a certain location. A villa in France or condominium in Florida would make a couple of good examples. The advantage is that you get a fixed price for your vacation every year and you can trade locations and weeks with other people having purchased timeshares from the same company.
The biggest problem is that you are not actually buying a real property; you’re just buying time and this even for a very high price, especially if your private property investment is located in a popular place. Trading the time and place with others is not actually as easy as it sounds, since most people want the same most popular locations during the same periods of time. You also have to pay maintenance fees, which will add up to more than you would pay for a good vacation somewhere else.
In conclusion, no matter what type of private property investment are you looking at, you have to consider the profits, as well as the costs, thoroughly. This will increase your chances of investing into a profitable business.
Recommended Reading
- 2nd Investment Mortgage Property
- Real Estate Investment Property
- The Truth about Capital Gains Tax Investment Property
- How to Make Money with an Investment in Rental Property
- Choose the Most Profitable Property Investment Opportunity
