Types of Investment Property

There are a number of different types of property investment, from those bought purely for monetary reasons to those that also fulfil a practical need. We've put together a list of the most common investment choices below:

Your Permanent Home

The most basic investment property is your permanent family home, which can be regarded as a business investment as well as a place to live. It can provide you with rent-free accommodation and will hopefully yield a profit when you come to sell it. Family homes can be used as a series of 'rungs' on the property ladder, in which you can trade up every few years to a more expensive house on the profits you have made on the previous house. However, you will need to bear in mind that although you may make a healthy profit on your home, it may be difficult to realise that money unless you trade down or move to where property is less expensive.

Holiday Homes

A holiday home can be a good investment in a number of ways. Not only can you let it to other holidaymakers to generate income, but you can also use it to provide your family and friends with rent-free holiday accommodation. Even letting the property for just a few months of the year (especially during school holidays) may be enough cover your entire mortgage repayments. However, you will also need to take into account the cost of upkeep; repairs, maintenance and cleaning costs can soon add up. If you choose to let the property out, you may need to use a management company to maintain your holiday home if you do not live close by.

Pied A Terres

Buying a city apartment is a popular choice for those that commute long distances or simply visit the city on a regular basis. It can work out much cheaper than staying in a hotel and will hopefully yield a good profit when you come to sell.

Retirement Homes

Purpose-designed retirement or sheltered housing has grown in popularity in recent years and there are now retirement developments in most regions. However, there are relatively few developers in the retirement sector and demand far outstrips supply, which means that retirement housing is largely unaffected by downturns and is therefore a good investment. The only restrictions are that you or your partner must be aged over 55 to buy a retirement property and you must usually use it as your principal residence.

Student Houses

If you have a child who is about to attend University, it may be worthwhile investing in a student property. Not only will they have the advantage of living in a better property than most students, but they will also save on rent. An ideal property will have a number of bedrooms to let out to other students, which should cover the mortgage payments. However, you may want to consider placing the letting arrangements with an agent to save putting your child in an awkward position when a flatmate doesn't pay the rent.

Student housing is often an excellent investment, as rental property in University towns is always in demand. When your child finishes University you can sell at a profit or continue to let it.

Investment-Only Properties

These properties are bought for one reason only - to make money! They can include run-down houses that can be done up and quickly sold on at a profit, or houses bought off-plan and then sold off before completion. If you are buying off-plan, it is usually best to purchase the property as soon as possible, as this is when the developers will be offering the highest discounts.