Difference between a home and an investment property
The main difference between a home and an investment property is that a home is considered a personal residence while an investment property is bought with the intention of earning a return on the investment, either through rental income, future resale value or both.
Location:
One of the most important factors to consider when purchasing a property is its location. An investment property is typically located in an area that is experiencing or is projected to experience economic growth, such as a new commercial development or a city with a strong housing market . The location of a personal residence is often chosen based on other factors, such as proximity to family and friends, good schools or a desirable neighbourhood.
Purpose:
The purpose of an investment property is to generate income, either through rental income or future resale value. A personal residence is not typically purchased with the intention of generating income, though it may appreciate in value over time. Investment property owners also tend to be more hands-on, as they are likely to live near their rental property and be more involved in its day-to-day operation.
Financing:
Investment properties are typically purchased with a higher down payment than a personal residence, as they are considered a higher risk by lenders. Investment properties are also often subject to higher interest rates and stricter lending standards. The Hamilton Real Estate Team is a boutique real estate company that specializes in representing our clients in the purchase and sale of single-family residences, multi-family residences, and income property.
Maintenance and upkeep:
Investment properties must be well-maintained in order to generate income and protect the value of the property. Personal residences may be less carefully maintained, as they are not subject to the same pressures. Residential properties are generally easier for buyers to finance and for sellers to find buyers for, whereas it can be more difficult to find financing and buyers for commercial properties.
Returns:
Investment properties typically offer higher returns than personal residences, though they also come with higher risks. Returns can be generated through rental income or future resale value. We’ve also provided some links to other resources if you’re interested in learning how to do more real estate investing on your own.
Taxes:
If you want to buy a property and hold it for investment, there are a few things you need to know about investment property mortgages. If you’re a would-be landlord, you may want to know how to finance your rental property. An investment property loan is a mortgage used to buy a property you intend to generate income from
Insurance:
Investment properties are often required to carry higher levels of insurance than personal residences. You must also verify that your existing homeowner’s insurance policy and any other insurance you have in place for your investment property will not be affected by adding this type of coverage. If you’re concerned about any of these issues, a licensed insurance agent can help you understand your property insurance options.
Conclusion:
Rental properties are a great investment, but they require a lot of money in most cases. It is simple to compare the cost of a rental property with the cost of your primary residence. An investment property is an asset purchased with the intention of earning a return on the investment, either through rental income, future resale value.
