Real estate is one of the oldest forms of investment. At its core, real estate investing is the acquisition of a property for the purposes of securing wealth and financial gain. Not all types of real estate investments are ideal for everyone, however. Keep reading for a short list of the general types of real estate properties and a quick summary of each to help you decide which investment is right for you.
Residential real estate is real estate that is intended for residence. This can be a single-family home, multi-unit residences, townhouses, or even mobile homes.
Investing in each property is slightly different, each requiring different management and upfront costs. As a general rule, multi-unit residences and apartment buildings require more substantial upfront costs than purchasing a condo or townhouse.
Residential real estate is the most traditional route of investment, and is generally the first step of investors entering the real estate investment world. Many people will also “flip” homes for sale – that is, purchase a run-down property, repair it, and sell it at a profit.
Industrial real estate refers to properties such as warehouses and manufacturing plants.
This is a more complex type of investment, and is usually better suited for more experienced investors with diverse portfolios. The upfront costs of these investments are much higher than residential or even commercial real estate, and investors will oftentimes need to tailor solutions and be willing to adapt to a tenant’s specific needs. The returns on these types of investments are generally higher than residential or commercial real estate investments, and usually come with the added perk of long-term leases.
Raw land investing is investing in land that can be developed in the future.
This type of investment requires extensive research into the development in the area, and it can require additional investment to develop the land if this is the route you choose to take. You can also purchase raw land in an area with high projected growth, and then sell it to a developer in the future. However, new developments take time and bureaucracy, and investors risk holding onto and paying taxes on a piece of land that does not provide a steady monthly yield for a (sometimes lengthy) period of time.