Investing in real estate has become a popular choice among the public lately, as the continually increasing value of properties is seen as a profitable opportunity in the long run.
For beginners in the investment world, it is advisable not to rush into property investment. Despite its allure, a deep understanding is required before embarking on this journey.
So, what exactly is property investment? What are the different types available? And, what are its advantages? Let’s delve into it further.
Definition of Property Investment
Property investment refers to the purchase of properties or real estate with the aim of gaining profits through various activities such as leasing or future resale.
Property investment has proven to be promising with great profit potential due to the properties’ tendency to increase in value over time.
According to Investopedia, property investment is investing in real estate with the goal of achieving a return on investment through rent, sales, or both.
Properties can be owned by individuals, companies, or corporations, and can be done both in the short and long term.
Types of Property Investment
According to sources from aesia.kemenkeu.go.id, there are four types of property investment suitable for beginners:
- Property Stocks: Involves ownership of companies engaged in property management, similar to property investment through equity crowdfunding. A securities account with a securities company is required to invest through trading applications.
- Property Equity Crowdfunding: Involves collective investment to purchase properties without needing to own them entirely. Funds are collected from multiple investors, then used to buy properties that are later leased or resold.
- Property Business: Investment in commercial properties such as office buildings, shopping centers, etc. Requires significant capital but offers significant profit potential.
- Family Residential Properties: Investment in residential properties such as boarding houses, apartments, or rental houses. Requires substantial initial capital for asset acquisition and maintenance.
Advantages of Property Investment
Some of the main advantages of property investment include:
- Passive Income: Property investment can generate passive income obtained without active involvement, through leasing or sales proceeds.
- Value Appreciation: Property values tend to increase over time, often exceeding inflation rates, promising long-term profits.
- Protection against Inflation: Property price increases tend to be higher than inflation rates, providing protection against the depreciation of money.
- Easy Management: Property investment does not require daily monitoring like stock or mutual fund investments. Simply purchase the property and manage it well to gain profits.
- Asset Collateral: Owned properties can be used as collateral when additional loans are needed, providing greater financial flexibility.
That is an overview of property investment, including its definition, types, and advantages. Hopefully, this information is useful for those considering steps into the world of property investment.
Property Investment, Types of Property Investment, Advantages of Property Investment