What is Investment Property?
It is important to understand the concept of investment property. A real estate property is purchased with the intention of making money either through future resale of the property or through rent. In some instances, both reselling and renting goes side by side. A property can be a long time or a short time endeavor. Examples of long-term plan include building apartments whereas short time plans incorporates flipping where a property is bought, then renovated and then sold at a profit.
The objective of such property
The objective of such property is to generate profits. In the case with real estate, buyer buys land at a certain rate and then sells off the land when the price value of the property enhances. In most cases, it has been observed that the cost price is far less as compared to the selling price of the land. All this makes the venture very much profitable for the seller. Often investors, in order to get the best value on sales, conduct studies to calculate the best and the most profitable use of any property. There are properties that are developed in multiple ways. The commercially zoned property is the best example that can be cited in this regard. By ascertaining the best use of such properties, investors can maximize their returns.
Significance of real estate among investors
In most countries the real estate markets are disorganized and therefore locating a property in such markets is very difficult. Individual properties cannot be interchanged and therefore seeking to calculate the prices and search for other investment opportunities is a major challenge for the investors. There are many players in the real estate sector, the competition is significant and the issue with locating the appropriate real estate property complicates the situation. It is because of this that the individual players use their network and skills to search for investment opportunities.
The process in which the real estate items are transacted
Once real estate investment property is located then the status and the condition of the property is verified. After such process, investors negotiate the sale price and the terms, conditions with the seller. In most cases, the investors hire agents and attorneys to handle the acquisition process. Property acquisition implies the venture capitalist makes a formal offer of purchase to the seller by giving him an earnest money.
If the price of the property, in this case the real estate properties, and the terms are negotiated properly then the capitalist completes the transaction. If the investor is discontented with the property within the contingency period then he can revoke the offer without any penalty, obtain a refund and ask for refund of earnest money. Once contingency period is over revoking the offer implies forfeiture of the earnest money as well as imposition of other penalties on the investor.
The above emphasizes the concept of investment property. In recent times, real estate properties, precious metal, foreign exchange are good examples of such property. Business entities like venture capitalists can make significant profits by dealing with such wealth.