Understanding Income Properties — What they are, why people buy them, and how to know if you are ready

You have no doubt seen on TV or heard on the radio all those ads that talk about making a lot of money with real estate through income properties (investment properties). These ads are full of large numbers, fancy jargon, and promises of a better life. But what are investment properties, why do people invest in real estate, and how do you know if it is for you? If you’ve asked yourself these questions before, we're here to help you; we’ll cover all of these topics and more. If you have any questions, or you want more personalized advice on the subject of investment properties, be sure to give us a call here at the Hughes Group. We have helped hundreds of people buy and sell investment properties and we would be glad to share our insight with you.

WARNING: Investing in real estate in any form is risky. Make sure you speak with a financial advisor before taking part in any real estate investing activity.

 

What are Income Properties/ Investment Property?

Let’s start off by defining an income property. An income property (also commonly called an investment property) is a property with the main purpose making the owner a profit. It is a business, in essence. However, there isn’t just one kind of investment or income property, there are actually several different kinds. No matter what kind you choose though, it is important to know that all these kinds of investment properties you hear about will funnel into 3 distinct income categories: Quick Income, Lumpsum Income, and Monthly Income

Quick Income Properties

Quick income is what you see on TV or hear on the radio the most often. Essentially, what you do is buy a property and then turn around and sell it for just a little bit more. In some iterations of this strategy, you will fix up parts (or all) of the house to increase its value. Sometimes, you will hear this strategy called ‘flipping’ as in ‘they flipped a house’. This strategy is used for those who want to make a quick nickel instead of waiting for the slow dime.

Lumpsum Income Properties

This kind of investing involves buying a property and holding on to it for years until it has grown in value. A lot of the time you see this happen with land out in the country. People will buy the property, hold on to it until they are about to retire, and then sell it. Usually, investors who use this strategy make little to no improvements to the property, they simply buy, hold, and sell. This is a great strategy for those who just want an easy way to invest their money for retirement.

Monthly Income Properties

Monthly income properties are properties that are optimized to send the owner a little bit of money every month. This can be in the form of a rental property, a leased commercial property, and so on. The key distinguishing factor is that the property generates monthly income for you, the owner. This is an investment property that is great for those who are looking to supplement their income every month or want to get as much money out of their property as they can. Though it doesn’t get you fast cash like the flipping strategy, a monthly income strategy will bring you in more money over a longer period of time. Not to mention, you can sell the property when you are ready to retire and still make a lump sum off of it.

The two biggest reasons that many people choose not to invest in a monthly income property include the attention they take and the potential for legal problems.

With a monthly income property, you have to make sure that it is cared for every month which includes collecting rent, taking care of repairs, and much more. Property management companies can be hired to take care of it, but that means you won’t get as much money every month.

The legal problems come about, usually, because of tenants. Due to the many complicated laws that surround landlord-tenant relations, there is a potential for lawsuits. Some people feel the best way to avoid that would be to just not have one of these properties in the first place. While it is not guaranteed that every landlord will have legal trouble with their tenant, it is best to prepare for them.

That being said, it is still a wonderful investment strategy that many people use to make a little bit of extra money every month.

Owner Occupied/ Non-owner Occupied

Townhomes in Boise IdahoOwner occupied, essentially, is an investment property that you, the owner lives in. So, this usually only works with the monthly income properties. For instance, if you own a duplex or an apartment complex, you can live in one unit and rent out the other. It is a great way to reduce your living costs and keep you close to your investments to make sure everything is going well.

Non-owner occupied spaces are those in which the owner does not live there. They live in their own home or apartment. The advantage to doing this is that you, as the owner, don’t have to live where your investment property is. You can have a property across the country and not have to move. It is a great arrangement for out of state buyers who can hire a property.

This is not all there is to know about income properties, but we hope you have a better understanding of them now than you did before. If you want to learn more about investment properties be sure to contact us here at the Hughes Group. Our dedicated team is there for you when you need them and can answer any and all question you might have about real estate in Boise.

Idaho Income Properties

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1714 N Cole, Boise $4,375,000

  • 28,306 SqFt

Fantastic Location Near Cole And Fairview Just Behind Axiom Fitness. This To Be Built Can Be Yours 30 Units For Only $4,375,000 This Is The Best Location For An Apartment Complex On The Market Today. A Perfect Mix Of 6-one Bedroom , 23-two Bedroom And 1 T...

Idaho MLS National Broker Connect Real E
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321 W Pennwood, Meridian $3,800,000

  • 25,220 SqFt
  • 7.37 Acres

Under Construction! Rainier Villas Is Meridian's Newest Multi-family Residential Apartment Complex. Boasting Well Built, Modern Units On Their Own Separate Deeded Lots Located Seconds From The Meridian Road Interchange And Walking Distance From Downtown Mer...

Idaho MLS Robnett Properties, Inc.
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231 Lauder, Moscow $2,875,000

 

Unique Opportunity Within The Moscow Area Market To Own A Large Investment Complex With Great Proximity To The University Of Idaho. It Is Rare That A Complex Of This Size Comes Available. This 40 Unit Complex Consists Of 1 & 2 Bedroom Units Plus A Coin-op L...

Idaho MLS Latah Realty, Llc
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177 W Pennwood, Meridian $1,950,000

  • 12,610 SqFt
  • 7.37 Acres

Under Construction! Rainier Villas Is Meridian's Newest Multi-family Residential Apartment Complex. Boasting Well Built, Modern Units On Their Own Separate Deeded Lots Located Seconds From The Meridian Road Interchange And Walking Distance From Downtown Mer...

Idaho MLS Robnett Properties, Inc.
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949 N Oregon St, Ontario $1,350,000

  • 3.81 Acres

35 Rental Units Include: 18 Plex, 6plex, 4plex, 3 Duplexes And One Single House On Continuous Tax Lot And To Be Sold As One Property. Property Also Includes 17 Storage Units And .96 Acre Of Bare Land. . 96 Acre Bare Land Is Available To Be Sold Separate For...

Idaho MLS Global Realty Northwest-oregon
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18854 Highway 30, Hagerman $1,225,000

  • 3,375 SqFt
  • 9.95 Acres

Like A Private Park? Like To Live In A Newer Fabulous, Gated Home Right On The Snake River? Like To Own Your Very Own Producing Vineyard? Entertain, Relax. Exercise And Enjoy All This Property Has To Offer You. Custom Home With Over 500' Of River Frontage, ...

Idaho MLS Berkshire Hathaway Homeservices Idaho Homes & Properties
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2315 Locust, Caldwell $1,189,000

  • 4,320 SqFt

Own Your Own Apartment Complex. Private Cul De Sac Location Near College Of Idaho, Downtown Caldwell, Nampa And Two(2) Freeway Interchanges To Reach Boise And Meridian. Easy Commutes. One(1) Lot With Three(3) Fourplexes And Your Own Irrigation Water....

Idaho MLS First Service Group Real Est.
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1303 W Fort, Boise $735,000

  • 7,320 SqFt

Boosts In Both Cash Flow And Condition Have Skyrocketed Ease And Value, Transforming This Listing Into The Best Deal In The North End. Location, Location, Location. You Get A Fully Rented Office Building, A Parking Lot, Plus A Duplex That Will Be Rehabbed A...

Idaho MLS Swope Investment Properties
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405 Whiffin, Middleton $725,000

  • 3,140 SqFt
  • 5.01 Acres

2-story Log House 3 Bd W/upstairs Bedrooms Each Having Their Own Balcony. Second House Is 900 Sq Ft 1bd, 1ba W/basement. Shop Is 3400 Sq Ft W/office Upstairs & Lg Storage Area & Ba. Shop Floor Has 1/2" Rebar & Is 61/2" Thick, 120 To 220 Outlets & Welding Ou...

Idaho MLS Berkshire Hathaway Home Services Idaho Realty
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Contact The Hughes Real Estate Group for more information on Investment Properties or to view Idaho homes: (208) 571-7145.

Idaho MLSIDX information is provided exclusively for consumers' personal, non-commercial use, and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. IMLS does not assume any liability for missing or inaccurate data. Information provided by IMLS is deemed reliable but not guaranteed.

Listing information last updated on August 19th, 2017 at 12:52am MDT.