Investment Properties
The Basics
Revenue generating real estate comes in many configurations but the common denominator is that the current and primary purpose for the property is that of income generation. It’s a broad definition that encompasess many sub-types and scenarios that are as diverse as the people who own and manage them. It is important to understand your goals, resources, involvement level timelines and many other factors in order to find revenue property fit that is best for you.
What impacts your income property selection?
Interest Rates
Market dynamics
Economic conditions
Location
Access to major thoroughfares
Access to public transit
Proximity to recreation
Community life cycle stage
Zoning
Competition
Taxation
Inventory
Long Term Rental
The most recognizable form of income property is the long term rental. The goal here is to attract and maintain the highest quality tenant, for the highest rent for terms of 6-12 months with the expectation that this will continue for years to come. While generating revenue on a monthly basis there is the secondary benefit of capital appreciation in an up market that adds equity to the property. This is a tried and true method to build wealth that typically comes with lower positive cash flow.
Short Term Rental
With the advent of short term rental booking sites this segment has grown substantially in the last decade. The selection criteria of buying a short term rental property will look different than that of a long term rental and so will the tenants ( guests ). Here you find the emphasis is on the the guests experience, more than proximity to schools and work centers. Stays are shorter, returns can be higher but so is the level of involvement.
Distressed Sale
The buyer here intends to purchase a property where there is a financial or legal reason why a home is up for sale. Typically there is an elevated risk more barriers to these purchases and therefore removes interest from a lot of buyers. By taking the additional risk the buyer hopes for a discount that they can then turn into a profit once the property is de-risked and placed back up for sale.
The Flip
The targets here are properties where alterations and updates in high value areas will yield increased interest and quick profit. Quick turn around, and construction management are key here. The flip does not rely on strictly market appreciation but rather the increased value of the specific property to generate revenue. No monthly cash flow and market exposure are key factors in this type of income property.
Multi-Family Property For Sale Calgary
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