To understand what Active Property Investment is, it’s most useful to look at the alternative – “Passive” Property Investment.
The best example of Passive Property Investment is the “buy and hold” strategy: buy property and hold it for the long term. As the value of land goes up due to greater demand for a finite supply, then the value of your property investment will also tend to rise.
The problem with Passive Property Investment is that you are left merely waiting for an increase in value over time. This may work well a rapidly rising market, but in a moderate or flat market, the investor may be waiting a long time to experience growth.
This is where Active Property Investment comes in.
Active Property Investment is actively adding value to land and buildings in one of two main ways:
- Renovating or
With the Active Investment Strategy, the investor can thus benefit from TWO sources of growth: the underlying increase in the value of the land, PLUS the increase driven by the active component of the strategy.
The advantage is that an Active Property Investment strategy allows investors to potentially profit faster – even in a flat real estate market. And in a strong or booming market, the returns are even more impressive with Active strategies.