Over the past few years, real estate has been a popular investment option. If you’re one of many who are interested, Blue Door Realty Company says there are several different types of real estate investment opportunities to consider.
But first, you’ll need to figure out which one is right for you. Let’s take a look at what types of investment options are available.
1. Commercial Real Estate
When it comes to commercial real estate, we’re talking about a fairly broad umbrella. Investing in commercial property is when you’re looking to have a space that is rented out by other businesses. There are seven kinds of commercial real property properties.
- Apartments for multi-family living
- Spaces for offices
- Industrial
- Retail
- Hospitality
- Mixed-Use
- For Special Purposes
It is possible to narrow the options further by selecting from these types. You can narrow it down further by choosing multi-family apartments.
This is one of the more complicated realms of real estate; so it’s always recommended, especially as a beginner investor, to work with a commercial property management company.
They’re able to handle most of the logistics in managing the property so you can focus on making the most profit from your initial investment.
2. Residential Real Estate
More information about residential real estate common property to invest in for beginners as it’s easier to obtain financial backing and has less risk than standard commercial real estate. Not to say that there isn’t any risk involved, but the process is much less complex.
This property can be considered a condo, single-family home, townhome or vacation home.
When it comes to investing in residential real estate, there are three major options.
You’re either purchasing the property to lease it out to a potential tenant for passive income, rent it temporarily as a vacation home, or flip it to make a large lump sum all at once.
3. REITs
Real estate investment trusts (also known as REITs) are publically traded companies that specialize in commercial real estate. You can purchase shares through the stock exchange.
You can directly invest in properties owned by these companies without needing to make the necessary work. Although REITs can have some risks, these investments are attractive for those with the ability to invest several thousand dollars.
You can make a faster profit by investing in REITs. They must return at least 90% of an investor’s annual taxable income. Plus, you can sell your shares at any point if you’re ever in need of extra cash.
4. Crowdfunding
If you’re looking to invest in real estate but don’t have a large financial backing to get you started, crowdfunding investments may be an alternative for you. These are sites where you can place as low as $500. A REIT, however, can cost upwards to a few thousand.
There is, however, a much larger risk when it comes to these types of investments, as they’re relatively new. These investors are either married and have a minimum of $1 million in net worth.
Other smaller crowdfunding platforms will work with unaccredited investors but the downside is once you’ve invested, you won’t see a return for several years.
5. Land
While investing in land may seem the easiest option for real estate investors, it is also the most difficult. You can’t just buy a lot of land and hope for the best. It is important to identify your potential buyers and target market.
You could use it for agriculture, provided the land has been set up to allow for that type of venture. Or perhaps a commercial property investor wants to build an apartment complex on the land, but it’s not within a desirable location or doesn’t adhere to certain building or zoning laws.
Summary
Real estate investingEach investment comes with its risks. However, the potential rewards are huge if done properly. Ask for advice from other investors with years of experience. Find out what worked for them or what they wish they’d done differently.
Do research on the market you intend to invest in or talk to a brokerage firm if you’d rather invest without owning property yourself.