Before hiring someone for investment property management, you need to identify the type of property that they’ll be managing. Knowing this type of information is also tremendously valuable if you don’t have a property yet but are looking to invest in some.
Different types of properties entail different types of investment property management techniques and a lot of people make the mistake of not knowing them. Hopefully, this guide can help you identify the type of management that you need, as well as provide you with some information on the types of property in case you still haven’t invested and need to know the difference.
Residential properties are by far the most popular type of properties that people look for when investing. Residential properties like apartments, homes, townhouses, and homes for holidays, just to name a few, are the most commonly encountered investment properties. They are the ones that are almost always in business and are usually occupied.
People are moving in and out of places all the time. They could be moving to a more expensive place because of a raise or to a cheaper one because they got laid off. Either way, all homes have a market and people that are interested.
Commercial properties are those that are used for business. Think of an office space, a retail store, or even something as large as a factory. If property is used for business and trade then it’s a commercial one. On the other hand, if it’s simply used for residence and is a place for people to inhabit and live, then it’s a residential property.
There are a few differences when it comes to management between commercial and residential properties or else, they would be put together under the same entity. One major difference is that with a residential property, it’s the owner’s job to perform regular maintenance for the place while that’s not the case with commercial properties. A person who rents a commercial property is simply renting the outer shell. Any damages or changes made are to be paid for by the renter and not the tenant.
The problem with commercial properties is that they can be harder to find tenants for. Businesses can be unstable. If the economy is poor and a certain type of business isn’t doing well right now, then your tenant might decide to close shop especially if they’re not making enough profit to cover the cost of rent.
Vacant land is the least popular type of property and that’s because it carries the highest risk. You’ll need to have a very clear idea of what to do with that land and ensure that you have enough money for your plans.
Knowing what type of property you’re interested in is a key step before thinking about investment property management. Each property type has risks and rewards that need to be carefully considered before proceeding with your plans. So know the advantages and disadvantages of each and consider your financial situation first.