Braden Equities Inc., an Edmonton-based real estate and property management company, has put together this article to help you choose the best type of property investment. Purchasing an investment property continues to be one of the most popular ways to invest.
The purpose should be to increase your wealth and secure your financial future. With that being said, there is no guarantee that you will see immediate and positive returns. While it is true that most of the time it can be profitable, it certainly isn’t a sure thing, and you have to be willing to put in the work.
Keep in mind that your success in this enterprise will hinge greatly upon how well you manage your investment, and how well you plan ahead. This means selecting the right type of investment property initially.
There are several ways investors can earn additional income from property investments:
- Residential real estate investments are properties such as single dwelling houses, apartment complexes, townhouses, or vacation homes, where a person or family pays to live in the property on a temporary basis. The length of their stay is based upon the rental or lease agreement.
- Commercial real estate investments consist primarily of office buildings. This means purchasing or constructing a small building with individual offices, and leasing them out to companies and small business owners, who then pay rent to use the property.
- Retail real estate investments consist of malls, shopping centres and other retail storefronts. Sometimes the landlord will also receive a percentage of the profits that the businesses within generate, in addition to a base rent, which will enable them to keep the property in good condition.
- Mixed-use real estate investments are properties that combine any of the above categories into a single endeavour. Mixed-use real estate investments are popular for those with significant capital to invest, because they may require some diversification, which is important for controlling risk.
- Real Estate Investment Trusts or REITs can be bought and traded like stocks, and they are owned within a portfolio of underlying real estate or real estate mortgages. Understanding the differences, advantages, and drawbacks of REITs is important when considering this type of investment.
Remember, purchasing real estate is a long-term investment, and you should not be counting on it providing you with a substantial income in the early stages. The longer you can afford to commit the better, and as time goes by you can consider purchasing a second property.
Lastly, don’t get greedy, and make sure to find the right balance between financial stability and general happiness in life.