Investment Property--Your Potential for Profit Investment property refers to any property purchased with the intention of generating income or an eventual profit. It can include residential and commercial property and can cover both short- and long-term investments. The ultimate goal of an investment property is to realize a return on your investment.

Unlike a primary residence or second home, an investment property is not occupied by the investor. This means that these investments carry a higher degree of risk than traditional property purchases and require more financial capital to put a deal together. It is therefore more difficult for an investor to secure financing for an investment property.

An investor might purchase a property with the expectation of gaining returns through rent, future resale value or both. This will depend on the investor’s goals, the type of property purchased and the current market conditions. Some strategies that may be employed to capitalize on investment properties include renting properties out short-term, such as vacation homes; buying and renovating properties to improve and resell; and purchasing with the express intention of holding and reselling at a later date.

Investors who decide to sell an investment property may have to report the capital gains, as taxes may be due. This can vary depending on the investor’s citizenship and their location. Investors should always check their local regulation and consult a qualified accountant before selling any property.

In most cases, an investment property is a great opportunity for investors to secure their financial future. With a well informed strategy, a property purchase can be a lucrative investment. However, investor’s should understand the risks, legalities, and potential obligations associated with a property purchase before making a commitment.