Real
estate is one of the greatest ways to build wealth, no secret there.
Now there are hundreds of different ways to invest in real
estate...maybe even thousands! (looks like I’ll have some more
blogs to post...) Today I will share with you the four types of real
estate: residential, commercial, industrial and land. Let’s get
going:
Residential
- Residential properties include: single-family homes, multi-family
homes (2-4 apartments), mobile homes, townhouses, and condos. Each
type can generate investment returns in different ways like, capital
gains from a fix & flip, appreciation, rentals, and Air bnb to
name a few. Residential real estate is a great way for new investors
to get in the game! A great way to do this is called “house-hacking”.
House hacking is where you buy a property, then rent out the other
rooms or units to cover your expenses as the home owner! This genre
of real estate is relatively well known and I’ll dive into more
specific points in further posts.
Commercial
– This is property used for retail purposes, office space, and
apartment buildings containing 5 or more units. Investors buy these
properties and rent them to business owners who need space to run
their companies, buy and sell goods and services, and large apartment
complexes. You’ll see these spaces all around the city or town you
live in, you’re favorite restaurant, morning coffee stop, the local
fashion store, that brewery on the corner and that new apartment
complex your best friend just moved into. Commercial properties are a
great way for investors to spread out their portfolio and offer
favorable leasing options for the owner along with some great
returns. Now commercial real estate can be more complicated and
difficult to get into...but that’s why you’re here investing in
your education!
Industrial
- Industrial properties typically include buildings used by companies
for the manufacturing, warehousing, and distribution of their
product. Savvy real estate investors know that industrial space can
generate some amazing returns with very few expenses. They often
yield higher returns with longer leases, turnover rates are much
lower, and favorable lease options where the tenant/company pays for
a majority/all the monthly expenses. However, on the flip side, the
building could sit vacant for a long while in between tenants due to
the uniqueness of this real estate class. Now I would say industrial
real estate investing is one step higher than commercial, with
regards to difficulty entering the market and overall understanding
of the investment. This is a great next step to take to get to that
next level of real estate investing that you’re striving for!
Land -
Buying land is a proven investment strategy that can produce healthy
returns. Generally buying raw land won’t net you any passive income
unless you get creative (leave a comment for creative uses of land
below!!) Land in a popular location or spot that could be the site
for future development can pay off handsomely in the future. There is
generally less competition with vacant land as well, individuals
don’t see the potential, can’t see possibilities of passive
income, impatient, and land’s just “too boring.” All this can
be more lucrative to a knowledgeable land investor!
Now
this is a very quick, simple, and shallow over view of each category
aiming to get the new investor’s feet wet or a quick re-fresher
read to a seasoned investor. All this well I work on improving my
skills and goals to become more active blogger! I’ll be looking to
dive in deeper on these categories along with some other methods to
invest in real estate soon! Please let me know what you think along
with any constructive feedback, questions, etc and just reach out
with a follow or connection here on BP!
Thanks
for reading, great job continuing your education, and don’t forget
to comment your thoughts!
