Investing in property is one of the major areas of investment today, with more and more people involved in buying as well as selling the same. Property investment can be broadly divided into two categories, namely house investment and land investment. Both types of investment have similar risks but different advantages and disadvantages. While there is no wrong type of investment with respect to property, it is always advisable to understand the pros and cons of these two main categories before actually putting your money into any of these.
It is pertinent to note that in both types of investment, namely house and land investment, liquidity can be a problem, at least initially. However, in the long run, it is obvious that both types of investment yield profits. While experts believe that land is a low risk investment as compared to all others, house investment has more advantages when compared to land investment. Firstly, the amount of money that you need to put down to get a mortgage loan for house investment is far less than land investment. In other words, down payment is more when it is land than when it is house, making it easy for people to invest in homes.
Secondly, selling your house property is easier than land investment. This is because you have more people looking for house properties as compared to those who are interested in buying land. So, if you are in the real estate business, making money through flipping is easy and requires lesser investment when it is a house property than in the case of land. With regard to land investment, flipping for a good profit is often difficult unless you have built something on it or improved it. This means that the investor has to not only invest in the land but also invest into creating something, which can then be sold for a profit.
Another major advantage of house investment is that you can let it out to tenants for a monthly rent unlike land investment. Houses or rental properties are a great way for people in the real estate business to make steady income with absolutely low risk. Of course, it is imperative to include cost of repairs, taxes as well as mortgage payments before you calculate profits from the rental properties. While the profit yielding process might be slow and small in the beginning, the biggest advantage is that it brings a steady cash flow, which will gradually increase after you repay your entire mortgage payment. Moreover, it is immediate cash flow, which is not the case with a land investment, where you have to build before you can rent out or make profit from rents.
While it is true that in rental properties or houses, you might have to make some minor repairs or renovate before you let it out, in normal practices, this is not as extensive as constructing a new building or home on a piece of land. Therefore, the time required for such repairs or renovation is minimal, often ensuring that you start earning profits or returns from your investment, almost immediately.