When people think about buying a property, it is usually as a goal towards settling down and owning their dream home. Owning an investment property is a lot different and although the expression speaks for itself, there still is some common misconceptions about what it actually is.
To understand the difference between owning a property and owning an investment property, you must first understand the difference between two most common ways or methods of spending money.
Spending money, in its most general form, is divided into two methods, financial investment spending and life spending.
Financial Investment spending speaks for itself, once again. It is the method of investing money with the chance of yielding back profits. The other method, life spending, goes by many other names. Sometimes it is called the cost of living, social spending, or plainly the cost of life. Although these terms differ from one another, they still all describe the same type of money expenditure – the expenditure with no expected profits in return. Spending money this way sustains your life, lets you exist in a social environment and such, and yields back life and experience in return, but since it doesn’t yield profits it is not considered financial investment spending.
So, by following this model, you can understand the simple difference between spending money on an investment property and on owning a property.
If you buy a house for your family, where you move in and life your life, this falls in to the category of life spending. Buying a house for you to live in will yield back the place to live for you and your family, but it will only ask for you to spend money in it, with no chance (or low chance) of yielding profits while you live in it.
Owning an investment property simplymeans owning a property from which you expect profits from. So, it is in its basic nature not intended for you to live in. It can be any number of options, from stuff like owning flats that you rent, or houses, or business estates, etc…
So, investment property is, simply put, only considered to be a means to an end, an end with profits in mind. No matter if you rent out that space or sell it for a higher price, that property is meant to be only a factor in your investment strategy.
Many people have made the mistake of jumping at it too soon and purchasing a property for their family to live in. Experienced financial advisors and successful billionaires will always tell you that an investment property is almost always a better option to go for, even if you are not worried about profits.
An investment property presents the chance for you to seize your funds and have something tangible, with liquidation option available on demand and fast. If you are set on owning your home, than an investment property can also be viewed as a stepping stone towards fulfilling your dream.