The Differences between Buying Residential Property or Investment Property

When you want to invest a significant sum of your hard earned money in buying property, the eternal question remains - should you buy real estate for the sake of living in it or as an investment? The difference between the two is great, and so there are a few factors you should take into consideration in order to make the best decision for you.

It is important to remember that residential property is a matter which is related more to your own personal taste and needs. Investment property, on the other hand, which will be rented out to tenants, does not have to live up to such high standards. 

Location Location Location

The first and main difference when choosing residential or investment property is location. Residential property location integrates a number of factors that should be taken into consideration. A couple that chooses an apartment to live in, basically decides how their shared life will look like for the next few years. The school system in the area should be thoroughly examined for the sake of the children, as well as proximity to the workplace, choice between a house or an apartment inside a building, north or south, center or periphery, all these factors should be taken into consideration. Other factors include parents’ and immediate family’s proximity. An apartment for renting purposes, however, is more flexible. Because the needs in question are not those of the couple buying the property but those of others. Any apartment they decide to buy will suit another type of people. Whether these people are students, young couples or elderly people. 

Jump in Prices

Naturally, when choosing to invest such large sums of money, everyone’s fantasy is that the property will be worth - when the time comes - much more than it was at the time it was bought. Nevertheless, this factor is pushed to the side a bit when buying residential property. In this situation, there will be a higher preference for the perimeters each couple chooses for themselves. On the other hand, oftentimes this is the main focus when buying investment property. Higher return is more important than quality of life considerations, in this case.

Peace of Mind

Buying a residential apartment enables a strong feeling of belonging to a place, and the ability to “nest” grows. The landlord is not reliant on anyone’s momentary caprices, they cannot be evicted within three months’ notice or have their rent raised. However, living in a rented apartment which enables buying an apartment for rent provides a different type of peace of mind. The steady sum coming in every month from renting out the apartment enables making decisions such as resigning from an unpleasant workplace or moving to a more optimal place. 

Advantages and Disadvantages Either Way

Another factor to look out for is improving the living conditions. In a rented apartment there is no possibility of renovating or “pampering” the tenants with an additional floor, a jacuzzi or even a pergola in the yard, without the property owner’s consent. On the other hand, in a private apartment you can do whatever you want as long as the changes are compatible with the construction standard. However, living in a rented apartment enables much greater mobility and nomadism. Because the rented apartment does not belong to the tenants, there is nothing preventing them from leaving it, in accordance with the terms of the contract.