For novice investors, diving into the real estate world may seem just as enticing as a child walking into a playground. The urge to play all the fields can be very strong as young investors are eager to advance. This may not be a good idea for novice investors as it can result in a simple case of biting off more than you can chew. The real estate investment world is a large one and you must know the terrains to navigate it smartly and efficiently with any resources you can acquire, no matter how limited. The types of real estate are that terrain that you must master in order to succeed with your real estate investments and eventually achieve financial freedom.
What are the best types of real estate investment properties?
Real estate has managed to find its path into every aspect of our daily lives, whether you’re leaving your house or going to a Starbucks, the road takes you from a real estate property to another. One can divide real estate into four major categories to begin with:
- Residential real estate
- Commercial real estate
- Industrial real estate
Residential real estate
Residential real estate properties are properties purchased to be used as residence for families and individuals. Many investors prefer residential real estate over other types of real estate as it offers a wide range of selection and well-established value.
Residential real estate can be divided into two main categories:
The large selection for residential properties include townhouses, condos, apartments, residential buildings, and houses. Residential real estate offers many types of real estate investments that investors can choose from. Real estate investors opt for residential real estate investing to enhance their monthly earnings through rental income and to capitalize on the appreciation of such properties.
Related: Residential Real Estate Investing: The Best Way to Make Money in Real Estate.
Let’s put income properties under the microscope to understand what makes such properties the go-to investment strategy for most beginner real estate investors.
A real estate investor is often advised to buy rental properties to use as a source of secondary income. What income properties can do is provide the real estate investor with a method to cover rental expenses including mortgage and maintenance and an extra income that can be used however he/she pleases. Landlords can decide on a rental strategy that fits properties’ needs and aspects: landlords can either rent such properties the traditional way or use them as Airbnb properties for a higher rental income and more flexibility. This method of residential real estate investing may not be completely risk-free, but along with other types of real estate, it ranks among the top low risk investments.
Commercial real estate
Commercial properties are any properties or land plots that can be used for businesses and corporations. This type of real estate investing is not for the faint of heart! You need to be equipped with extensive real estate knowledge and analytical thinking to be able to make a successful commercial real estate deal. It generally requires a higher investment than other types of real estate. Most novice real estate investors are advised to hold off on investing in such properties until they have grasped the ins and outs of real estate.
Buying commercial real estate is an investment strategy that most real estate investors have their eyes on, but the complexity of the procedures that lead to owning such properties often push investors away.
Commercial properties include office buildings, retail shops, multi-purpose commercial land, and even gas stations. Dealing with businesses and companies means you will talk to professionals who are trying to do meaningful work on your property. This means stable income for the real estate investor as most businesses will take multi-year leases, leaving you to cash rent checks every month!
Related: How to Make Money from Commercial Real Estate for Rent?
Industrial real estate
Industrial real estate is the lesser crowded side of investing compared to other types of real estate, ranging from warehouses to carwashes; basically, any investment properties that corporations can use for distribution or storage or even manufacturing fall under this category. This type of real estate investments offers an appealing income for real estate investors who choose to venture into it.
Land is what lays under all those skyscrapers you see in overcrowded cities and under all suburban houses. All types of real estate investments began with land. Knowing that land appreciates just as rapidly as the properties that are located on it drives more and more real estate investors into this investment strategy. The key determinants to lands’ value are location and future use. Knowing the zoning laws and criteria in your county can help guide you in making a lucrative purchase. It’s good to keep in mind that cities are constantly expanding and what is an empty land now may be full of houses and buildings in less than a decade!
Related: Investing in Property or Investing in Land: Which Is Better?
How to determine the best types of real estate investments for you
With economic growth comes technological utilization and incorporation. Finding uses for technology within real estate has made real estate investments more predictable and more attainable for inexperienced investors. Most successful real estate investors have conducted a real estate market analysis and an investment property analysis in one way or another to ensure the viability of their investment decision. Nowadays, thanks to technology, you can conduct a thorough analysis through the comfort of your own home!
We recommend using Mashvisor’s analytical tools to help you navigate your road to financial security through real estate. Mashvisor offers a real estate market analysis to help you get the correct market value of any property you have your eyes on. Mashvisor also offers a heatmap analysis to guide you to what you need through visual cues. A heatmap analysis includes a neighborhood analysis to point out the strengths and weaknesses of any given property. Furthermore, if you’re looking to buy rental properties as an investment strategy, Mashvisor offers a rental property analysis with all the metrics you need to make a solid decision.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
There are many types of real estate that anyone can venture into. It doesn’t matter what your educational level is or what you do for a living! Real estate is a welcoming market for everyone. Stop delaying and making excuses and start investing for the future through buying an investment property!