For those new to property investment I think it’s important to really understand what property investment means. By understanding what is property investment this will give you a clearer idea whether this is something you want to get into. Because if you are after just to make a few quick dollars here and there with limited work, property investment is not for you. But there are ways you can invest in property without having to fix a toilet like managed funds.
Below I have outlined a few different and well known websites that have their own definition of what is property investment.
“Real estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development. Real estate is an asset form with limited liquidity relative to other investments, it is also capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent. If these factors are not well understood and managed by the investor, real estate becomes a risky investment. The primary cause of investment failure for real estate is that the investor goes into negative cash flow for a period of time that is not sustainable, often forcing them to resell the property at a loss or go into insolvency. A similar practice known as flipping is another reason for failure as the nature of the investment is often associated with short term profit with less effort.”
“Investment property is a real estate property that has been purchased with the intention of earning a return on the investment (purchase), either through rent (income), the future resale of the property, or both. An investment property can be a long-term endeavor, such as an apartment building, or an intended short-term investment in the case of flipping (where a property is bought, remodeled or renovated, and sold at a profit).”
“Lots of New Zealanders own rental property – it has been a popular form of investment over the years. The difference between an investment property and our own home is that we earn an income from it. Returns from property investment come from rental income and from any increase in the value of property over time.”
From the three definitions above based on What is Property Investment it seems to be clear that it is the intention of purchasing a property for a long or short period of time to gain returns on the income coming in from rent and or the capital (increase in value) over time. With the idea that you will eventually sell for a profit.Would love to see your thoughts in the comments below. Please note you can’t comment unless you have joined our community and it’s free (go here). So go ahead and share your thoughts.