A Beginner’s Guide to Property Investment
You may have started to realize that more and more people are talking about investing. This is partly because, due to the pandemic, many people are searching for extra sources of income. However, another factor is the fact that people are realizing how great investments are – by doing research and working wisely, you can turn your money into more money. One of the most popular and effective methods of investing is property investment. But it can be a bit tough to know where to start, which scares people off – after all, we’re talking about spending your money here, so you want to be sure you have all the information before you take the leap.
What is an investment?
As mentioned, investment refers to any money that you put into something with the hopes of getting more out than you put in. Simply put, you invest a bit of money, and over time, that money will either grow or provide some other form of income for you. If it’s something you can afford, it’s a great step to take financially. Investments may also have certain added benefits, especially when it comes to property investments. For example, the 1031 exchange rules could mean that, under the right circumstances, one could exchange one investment property for another, and be exempt from certain types of tax. You can learn more about this by looking at this 1031 exchange rules infographic.
Why property?
There are so many different investments, so why invest your money in property? After all, you could invest in other ventures for much less money. The truth is that property investment is great because of how versatile it is. There are multiple ways in which you can use an investment property to earn more money – but we’ll get to that in a bit. And, of course, you don’t have to spend all your money on the fanciest house. You can easily buy a neglected, run-down house and make a few home improvements to increase its value.
What can you use it for?
Anything you want! Here’s a fun fact – even if you just bought a house for personal use, it’s still an investment, because it’s an asset that you can later sell for a profit. You can buy a house, make a few upgrades, and sell it at a much higher price. Or you can use it as an Airbnb. However, the most popular way of using an investment property is to rent it out. This way, you’ll have an ongoing monthly source of income.
Who should invest in property?
Unfortunately, this investment avenue isn’t for everyone. If you invest in something, you need to still have enough money for all of your bills and necessities. This may not be possible with property investment, especially if you’ve just gotten the property, and are still waiting for renters or improvements. Keep in mind that investing and saving go hand in hand, so if it’s something you truly want but can’t afford just yet, you may be able to save up until you can afford it.
