There are several types of real estate that investors should be familiar with before they invest in. These includes commercial, residential, raw land, new construction etc.
Let’s look at each in detail;
a) Residential real estate
This is one of the most ideal real estate investment for novice investors who are investing for the first time because it can be easier to make a good profit consistently. There are many rental property types in residential real estate including single family, duplexes, multifamily properties and vacation homes.
Most of the common strategies used on existing residential real estate includes rehabbing, wholesaling and buy and hold property which is used mostly to generate rental income. Owing to this, investors should always be wise on which strategy to use by conducting thorough market research.
When managed accordingly, a real residential estate investment would for yield attractive profits. This is because aside from steady cash flow, investors benefits from a number of tax breaks.
b) Commercial property
For an investor who is focused on improving the community and getting income, commercial real estate investing can support that focus. Some of the best commercial properties to invest in include industrial, office, retail, hospitality and multifamily projects.
Commercial real estate is considered one of the best because of its higher cash flow. Advantages of this type of investment are higher income potential, longer leases, lesser competition in the commercial real estate because purchasing these properties can be larger undertaking than working with residential homes and lower vacancy rate than other forms of real estate.
c) Raw land and new construction.
Raw land refers to any vacant land ready for development and is most attractive in market. These pieces of land tend to be in good location and tend to have higher appreciation rate of that property. The Chief Executive Officer of Username Investments advises real estate beginners to consider investing in vacant land as it is more affordable.
Investing in new construction is however becoming a popular thing in the market. Most people prefer buying vacant residential plots near place than buying already built house. This type of investment can diversify an investor’s portfolio. Investors considering this type of real estate should do a thorough homework in order to maximize profits.
This would ensure you to choose a desirable area and prevent the investment from being hampered by market factors.
d) Industrial property
Just like commercial real estate, industrial real estate is used for business purpose. It is usually treated separately because of the specific ways that the property is used for instance, manufacturing, production facilities and food processing centers, freezer and refrigerated storage facilities, storage warehouses and distribution centers, research and development parks, power plans and solar generating stations etc.
In conclusion, it is important for a real estate investor to know which type of real estate is right for you and keeping in mind that not every market is good for all four types of real estate. Many people would prefer to begin by investing in residential real estate property because its market is twice as large as commercial real estate and also financing residential estate is easy.