What Are the Different Types of Real Estate Investing?

Everything to Know About Making Smart Real Estate InvestmentsReal estate investment is an activity that can make you money, teach you skills and eventually form the basis for a successful business. If you're new to real estate investment, you may have many questions about how this type of investment works. Real estate investment requires skill and strategy. If you're not aware of how this type of investment works, you can get help from a real estate professional, who can help you learn the ropes and become an expert.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Why Invest in Real Estate?

There are many reasons that people invest in real estate, and below are two of the most common factors.

Diversity

Real estate investors can make money through commercial and residential buildings, by renting, selling, building or fixing up. There are as many ways to make money off real estate as most people can imagine, and then some. People who choose to invest in real estate have so many options that they can pick and choose the types of real estate investment that appeal most to them.

High Profit

A good real estate investor can make a lot of money off of their properties. The most important decision that someone must make when trying to make money off of their properties is which type of real estate investment is right for them. For people who are new to real estate investing, it's a good idea to start in one of the less-expensive types of investment, like residential rental properties or fix-and-flip investment. After a beginning investor has tried their hand at residential real estate investment, they can start investing in other types of real estate that require a greater financial commitment and insider knowledge of the real estate industry.

What Are the Types of Real Estate?

There are several types of real estate investment, so people who would like to get started with this type of investment have many choices. In general, real estate investment can be divided into two groups: commercial and residential. Within those two categories, real estate investment can be further broken down into smaller sub-categories.

Rental Property

Rental homes are single-family residences with tenants. People who inherit a home from a relative often decide to rent out that property as an initial form of investment.

Fix and Flip

To perform a fix and flip, an investor purchases a fixer-upper home, makes dramatic repairs in a short period, and then resells the home for more money. Fix-and-flip investment is a great option for people who enjoy DIY home improvement projects.

Multi-Family Residential

Multi-family residential homes are buildings with two or more units. Multi-family residential units are advantageous because even when one unit sits empty, the building can still make money.

Industrial

Industrial properties can be highly specialized for the type of tenant the property is designed to attract. This means that industrial commercial property can be highly profitable if it's properly maintained and outfitted for the industry it serves.

Retail Locations

Retail locations can be divided into multiple spaces for multiple tenants. The more tenants a retail location accommodates, the more likely it is that retail location will make money.

Office Space

Office space needs a safe location, good parking and attractive features in order to meet the needs of serious businesses. Office space can be a good option, especially in times of economic growth.

You Want to Get Started In Real Estate Investment. What Now?

People who would like to get started in real estate investment should start by aligning themselves with some professionals in the area and by talking to a financial advisor who can help them decide where they'll get the money for starting their real estate venture. Working with the professionals makes investment less stressful and more successful.

Before a person can get started in real estate investment, they need to:

  • Line up financing or get a mortgage
  • Amass cash for a down payment or multiple down payments
  • Decide where and what type of real estate to invest in
  • Develop a business plan or an investment plan

Contact a Real Estate Professional

Are you hoping to start investing in real estate? If so, you should align yourself with a real estate professional. Your real estate agent can help you understand the different types of real estate investment, what kinds of investment tend to be most lucrative in your area, and which types of real estate investment will likely fit your personality and the amount of money you have to invest.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

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