Buying an Investment Property has many Advantages

In terms of rental property investment, the purchase of an investment property is often described as a very advantageous transaction compared to various separate purchases.

It is true that this type of investment brings many benefits, but we must not neglect the drawbacks to be expected. In this article, we take a full tour of everything you need to know before investing in an investment property.

Definition of an investment property

Historically, the term “apartment building” was born in the 18th century to designate the first buildings built in Paris with the aim of renting them out to “bring in” money regularly via rent. This building was then made up of several fairly similar dwellings.

Since then, the term has remained used to designate any purchase of a set of lots of the same property. He is opposed to the end of the co-ownership where several owners own one or more lots of this building.

We also rarely speak of a “rental hotel”, a “rental property” or even a “rental property”.

All these terms refer to the same thing: the possession by the same owner (natural or legal person) of an entire building with the aim of renting each of the lots that make it up in order to generate recurring rents which allow the latter to earn money.

Recommendations before investing in an investment property

Please note, that it is highly preferable not to start directly with an investment project of this type without experience in the rental property and you may find more information here.

Even after having invested essential time in theoretical training on taxation, administrative management (management of tenants, management of the tax return, etc.), and all the elements to know and optimize for an owner-lessor, this will never replace practice and confrontation with the reality on the ground.

Better to create the experience by investing first in a small home or parking space (less training on all the constraints, but allows you to set foot in the stirrup easily).

Ideally, you can start by buying a studio on a fairly tight budget. Help yourself, make your first mistakes!

Even with good preparation, you will do like everyone else. These will have a limited financial impact because the investment is. You will be able to use this first training rental project so as not to reproduce more costly errors on a larger project.

Then, once more armed, you can embark on the purchase of an investment property and benefit from its many advantages.

The advantages of buying an entire building completely and leasing it in batches

Why favor investment in a building of report rather than the purchase of large housing or of several distant residences (called “dry housing” by contrast)? Here is a list of the main benefits of such an investment:

Lower purchase price and lower running costs

One of the first qualities of an investment property is that of being cheaper overall than several separate purchases of different real estate for rent and Nyrentownsell has a lot of options.

  • The purchase price per square meter will be lower for a set of lots sold to a single buyer (bulk purchase) than for the same homes sold separately to different buyers.
  • There will only be one transaction with one seller. This, therefore, means that the bank or broker’s administrative fees will only have to be paid once for single financing.
  • You will only have to pay the notary once: see the details of the calculation of the notary’s fees to understand the usefulness of a single large payment rather than several small ones.
  • There will also only be one real estate agent’s commission to pay: usually, they charge a lower percentage on one big sale than on several small ones.

All this makes it possible to have a purchase cost of a building of report much lower than the purchase of the same goods taken one by one.

There will also be lower running costs for this particular type of investment:

  • Property taxes are generally lower on the entire building than on the sum of the lots taken separately.
  • There is no need for a condominium trustee because you will be the only owner and lessor. However, their costs can be quite high and for several years have been on a much stronger trend than inflation.
  • You can group the work of your craftsmen. With several interventions in the same place at the same time, you will have more leeway to negotiate the prices of your craftsmen (more substantial and more practical work for them).

These less costs will therefore also allow you to reduce management costs.

Better overall rental profitability

For your tenants, the fact that you are the sole owner of the entire building does not change anything. The prices of each housing, business, or office for rent will remain the same. You will thus have the same level of land income as for the purchase of several dry dwellings.

As you had a lower acquisition price and you also have lower management costs, you thus obtain better rental profitability.

Do the math. This can very quickly bring a not insignificant surplus of return. There are some great tools out there for calculating your rental yield and optimizing it all.

Simplification of management

It is undeniable that your management of this set of rental properties will be simplified:

There is no need to manage a condominium. This means that you will be the sole decision-maker of all the decisions to be made on renovation or improvement work, operating rules, etc.

You will also be free to carry out the work at your own pace, as you want or can, by choosing the service providers and the way to carry them out.

As we have seen below, a single large property to buy requires only one visit to the banker or broker, a single visit to the notary, a single intermediary real estate agent, etc. This not only saves the costs of all these interlocutors, but it also saves you a lot of time by limiting the number of meetings and various exchanges.

The same location for all the lots to be managed also saves time and appreciable constraints for the manager of these rentals. Either you do it yourself and it makes your life easier.

Either you have it managed by a real estate agency and this can reduce the cost because it simplifies their management. It will be the same for the craftsmen or any other professional having to intervene in this building.

Risk distribution over several lots

The risk of default and problems with a tenant is spread over different assets. If this distribution of risk is the same as for several separate dwellings, it can nevertheless be a plus for the bank that gives you a mortgage. Indeed, it will be several different rents that will cover the need to pay the repayment of your mortgage.

There is therefore less risk for the payment of your monthly payments because several tenants assure you of regular income for this property that it has financed.

In addition, you also have the option of choosing a building that allows you to mix the uses on the different lots: homes, commercial premises, offices, parking lots, garages, etc.

Possibility of gradually selling the lots at a better price

When you want to sell this investment property, you will have the choice of selling the whole complex or selling it lot by lot. This then leaves you the possibility of keeping those who have the best profitability compared to their current value in the real estate market.

A sale of each property individually would allow you a better profit because they will be sold more expensive separately than altogether to a single purchaser.

However, to achieve this, he carefully studies the work and costs necessary before being able to sell each lot separately:

  • Work will probably be necessary to properly separate the lots and all their accesses, particularly with regard to fluids (water, electricity, gas, etc.).
  • Costs and efforts to be expected for the creation of a co-ownership.

This is an additional possible avenue to improve the profitability of an investment in an investment property.

To conclude:  With these various tips and information on the purchase of an investment property, you have all the right questions to ask yourself in order to get the most out of your investment.

This will allow you to optimize your profits while limiting the various risks inherent in this type of rental project.


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