Which Property Types for Investment?
When you decide which country and region you wish to buy an investment property in, the next step is to decide which type of property you wish to buy. This may be determined to some extent by the money you have available, but bigger is not always better, and smaller is not always a hindrence. Each type of property has its own benefits and drawbacks, and should be considered in its own right.
Villa
A
villa is considered to be a detached house surrounded by a garden or land.
It is often the goal of someone investing abroad to buy a detached villa.
The main advantages are that there is little noise from neighbours, you
are not dependant on the owners of other property for decisions on upkeep
and management, there is usually more space for family accommodation,
and there is often surrounding land on which to have a bar-b-que or include
a pool. While a pool is a positive asset in attracting renters, especially
in a warm climate, it does require constant maintenance. Be wary of adding
on as many bedrooms as you can simply thinking that bigger is better.
A three or four bedroom villa will accommodate one or two families. If
you extend to five or six bedrooms, the villa will be used by larger families
or by groups of people holidaying together, and it may suffer more wear
and tear.
House
A house differs from a villa only in its setting. A house would not be surrounded by land and would have less space surrounding. In practise the two terms are often used interchangeably, with 'villa' seen as being more up-market. The same benefits apply to houses as to villas, but a pool is a plus in a hot country.
Town House
Town
houses are joined side by side. This means they are cheaper to build and
cheaper to heat and cool. They may have some space at the front and back,
but not as much as a villa. A disadvantage is that you may be subject
to noise from the properties on either side. There will be less space
for parking, but options like having a bar-b-que and sunbathing in your
own space are still good.
Apartment
An
apartment is a self contained property within a block of properties. It
is one of the cheapest forms of accommodation to buy and invest in. Apartments
can range in size from a one room structure with kitchen and bathroom
(studio apartment) to a large multiroom penthouse suite on top of the
block. Apartments enable investors to get a foothold in the market. They
are increasingly common in areas where land is becoming expensive. Because
an apartment is part of a larger structure, the overall building is maintained
by a management company. This has the advantage of removing responsibility
for upkeep and maintenance of the surrounding structure from your 'things
to do', but you will have to pay the management company for the work.
A disadvantage of apartment living is that your apartment may be above,
below, beside and behind other apartments which can lead to noise problems.
Condominium
A condominium is technically the name for an apartment block, although it is often used interchangeably with the term 'apartment'.
New Build Property
If you buy a new build property there are unique advantages and disadvantages. All of the services, fixtures and fittings are new so you are starting a period which should be low maintenance and cost. It will also be easier to sell or rent out the property when it is clean and fresh. You may be able to specify colour schemes and layout options while the property is being built, meaning you can adapt it to suit your own needs.
The cost of new build property is usually higher than the equivalent resale property, which will offset some of the maintenance savings. Where there are advantages to be gained is in the timing of your investment. Buying at the start of construction of a new development usually means prices will be lower. This is to provide an initial set of sales to generate more interest, and because construction work in the neighbourhood can put some buyers off.
Resale Property
The biggest benefit in buying resale property is that it is immediately available. Prices are generally lower than new build properties, but there may be maintenance and decorating costs.