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What Type of Property Investment Is Right for You?

Property is widely recognized as one of the best investments around. If you own your own home, you can earn money from it in a way that renters can’t. If you can buy investment property then you have even more options. With that in mind, here’s a quick guide to the different types of property investment and how they stack up.

Residential Property

This is the backbone of property investment and probably always will be. The logic behind this is both simple and compelling. People will always need somewhere to live and for many people renting is clearly the best option.

The most obvious example of this is the young adult demographic. For young adults, the flexibility of renting is often far more valuable than the stability of homeownership. Similarly “empty nesters” often want or need to rent for a while. For example, they may sell their family home before they are ready to pick a forever home.

As a result, there is practically guaranteed to be demand for rental property. The onus, however, is very much on you to pick the right property and to make sure that you get it for the right price. Getting the right property, however, is only part of the story. You then have to get the right tenant. Once you have the right tenant, you then have to manage them.

One key point to note about residential property is that it tends to be regulated. In fact, depending on where your property is located it may be very highly regulated. It’s therefore generally best to hire a reputable property management firm to handle management issues for you. This will keep you on the right side of the law and also keep your tenants happy.

Vacation Property

There’s nothing particularly new about the vacation property market itself. It’s been around and strong since long before COVID19. The demand for vacation rentals may tail off slightly as the world opens up again. It is, however, unlikely to tail off enough to reduce the attractiveness of vacation property as an investment.

It’s also very possible that demand will stay stable or even grow. Firstly, there is a growing emphasis on prioritizing experiences such as vacation travel over accumulating possessions. Secondly, the movement towards sustainability means that people are more likely to restrict their international travel and increase the time they spend vacationing at home.

Vacation property can generate excellent returns. You should, however, be aware that it requires a very different approach from residential property. With vacation property, you’re essentially running a mini-hotel. This means that you have to put a huge emphasis on marketing and ensure the very highest standards of care for your guests.

Commercial Property

For private individuals, commercial property is easily the smallest of the property investment niches. It’s also potentially the riskiest niche, at least in the short term. Right now, businesses are in a state of flux and it’s unclear what sort of commercial property will be in demand as the world moves into the “new normal”.

With that said, it’s certainly advisable to remember that the commercial property sector exists. You may even want to keep an eye on it for future developments. As the world settles down again, it could be a useful way for you to diversify.

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