Property investing versus property development
The topic of property investing versus property development is always a hot one to inexperienced buyers interested in venturing into the property market. Though the two can be easily classified into one topic, the truth is that they’re quite distinct.
Property development refers to a situation where by a person acquires a residential property below the prevailing market value, often in a state of disrepair then develops it into something that can be put up for resale. Thus profit is realized by the developer. Time has to be factored into the equation as development is mostly linear and hands on. Meaning Individual property developers can normally only deal with one project at a time.
Property investment by contrast is about the rental market and is fully scalable. Scalability makes property investment more lucrative that property development. The best starting point for beginners is to conduct research on properties in a preferred area – local property agents could be a very useful source of information on properties. Avoid flats and apartments where you may have to include the charge of ground rent and communal maintenance since this charges will reduce your profit.
Note that your profit does not come from the potential of future equity rise on your investment but on the solid monthly rent payable by your tenants. As a parting shot, I’d like to make it clear that buying property for investment is a must do thing to people interested at securing their financial future, investment in property is a good way to hedge your funds against the corrosive effects of inflation.
When you purchase a good property, then you can be assured that its value will definitely appreciate in the future. But remember that if you find a good developer and a location that happens to be a jewel, then don’t shy away from it because its value will grow exponentially, giving you faster wealth growth as opposed to other investments.
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