Why is income property the best form of investment?

  • The decision is yours
  • Property appreciation
  • Types of property investments

From purchasing condos for Sale in Iloilo to acquiring a house and lot for sale, real estate will always be a great investment option. It can take the form of short-term investments or long-term investments. People take this as an opportunity to start building wealth and even as a stable source of income. Let’s see why income property is the best form of investment:

The Decision is Yours

Investing in income property involves a lot of decision-making. This essentially makes you your own boss. From the property you seek to invest in, the people who will rent out your place, and ultimately, how the property will be managed and maintained are up to your discretion.

What makes investing in properties and earning from it so great is the opportunity to work flexibility and freedom. Many individuals who choose to invest in properties choose to do this as a way to generate additional income on the side. However, it is entirely possible to make a living solely on having properties rented out or buying and selling land.

Being employed with a 9 am to 5 pm job subjects you to a number of restrictions with your work. Ultimately, the decisions of your boss and the general ruling of the company are going to dictate your lifestyle. Other forms of investment on the other hand, such as stocks or bonds, may offer you some freedom but you’re not in total control of the outcome or return. Someone else is involved with the management of your money. With property investments, you’re at the helm of your business.

Property Appreciation

Land is one of the few assets that will constantly appreciate in value. The continuous rise in demand greatly contributes to this factor (in addition to the fact that supply is finite). As time takes its course, expect a huge drop in the availability of land. But we have to make a clear distinction between the house and the land. To avoid any confusion, the house which is the physical structure over the land depreciates over time. It’s what’s underneath the structure that constantly appreciates.

If you want to make the most out of your property investments, it's best to start as early as possible. The obvious reason for this is that land will always be considerably cheaper during the pre-selling stages. If you’re looking to invest and earn from property, one of the best ways to start, especially if you need some aid in funding, is to use what is called "leverage."

Leverage involves buying a property by splitting the payment into two: a portion from your personal money and a borrowed portion from a lender. 

The amount of your own money that you will shell out is typically less compared to the amount of money you will borrow. This is because the leveraged loan could be up to 5 to 20 times more than the personal amount you paid. 

An investment in a property can be considered “highly leveraged’ if the debt is higher than the equity. Here is an example:

You invest P100,000 of your own money.

You borrow P1 million from a lender.

This gives you a total of P1,100,000 to purchase a property.

If your property increases in value by 5% every year, it means that the entire P1,100,000 will as well. As the years pass, your P100,000 payment will continue to grow in value by leaps and bounds.

Types of Property Investments

There are three common ways of making great returns from properties: through rental properties, vacant land, and fix-and-flip properties. 

Rental properties are among the most common ways to earn money from land, but returns aren't as quick as one expects them to be. Though it’s undeniably one of the best ways to earn passive income, you may acquire great returns in the long run. This is prevalent in both Dumaguete and Iloilo condos that are for sale. One Spatial Iloilo is a perfect example of this. Earning money will always take some time but the long term benefits are always worth the wait.

Vacant land, on the other hand, is much like buying a house and lot for sale with the house off of the equation. Why would you want to buy a lot without a physical structure? That’s because lots without anything built on it tend to sell for much cheaper. Later on, after coming to terms with property taxes and so on, you can sell the land for a higher price than what you initially bought it for. 

Fix-and-flip properties may be one of the most popular ways of earning a great deal of income from properties in the Philippines. This involves purchasing a property in terrible shape, fixing it, and selling it for a higher price. This form is a short-term investment and involves high costs. 

Key Takeaway

Investing in properties involves making solid decisions and commitments prior to making your first purchase. Whether it’s buying a home, apartment, condominium unit, or a lot, you’ll need to establish a plan and what you’ll do with your investment. Though it’s being responsible for your investments is the best way to expect great returns.