3 Different Types of Property Investment | Home Loan Experts

As an investor, you can choose from a variety of properties. The three primary types people invest in are commercial, residential and vacant land.

But before you decide on the type of property you want, you must do extensive research. You must know things like how property investments work and why you’re looking to invest.

In addition to that, you must ask yourself what kind of investor you want to be, as that will determine the type of investment strategy you want to implement and the type of property you choose to purchase.

Typically, there are three types of property investors:

Types of Property Investors

Flippers / Renovators

Flippers, also known as renovators, are looking to buy residential properties to renovate them and sell them for a profit within a short period. They take an aggressive investment approach and are strategic in their property assessments to avoid overvaluation and other costly mistakes.

Although their strategy, which is risky, focuses on building equity, the potential for returns is also higher.

However, as flipping is about buying and selling for a quick profit, if you can’t sell the property quickly, you might make less profit and even end up losing money.

Landlords / Passive Property Investors

Landlords are passive investors who minimise risk by committing to long-term strategies. They earn profit through rental income and tax offsets, and take advantage of capital growth by eventually selling or accessing equity.

Usually, people either aim to be passive income investors or just want the rent to help cover some of the mortgage to go for capital gains.

Commercial

Commercial investors target property trusts, security funds and syndicates and tend more towards commercial property. They take on a moderate amount of risk, as they invest in assets that generate income instead of searching for potential high-growth properties, which are often a greater risk because:

  • Finding a property with potential for high growth in an area that generates good resale value or proper tenants can be a challenge.

When you know what kind of investor you are or want to be, you’re ready to examine the most popular types of investment properties:

What Are The Three Different Types of Property Investment?

Vacant Land

Buying vacant land is usually a passive long-term investment but requires much research and a good strategy. When looking to invest in vacant land, you need to look out for things such as:

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